Natural disasters and economic growth: The role of banking market structure

Duqi, Andi; McGowan, Danny; Onali, Enrico; Torluccio, Giuseppe

Abstract

Following a natural disaster, the rate of economic growth recovers faster in less competitive banking markets. A 10% reduction in competition increases the rate of economic growth by 0.3%. In less competitive markets, banks respond to a disaster by increasing the supply of real estate credit by refinancing mortgage loans, but do not lend more to businesses or consumers. Instead, government agencies provide disaster loans to affected businesses and households. Smaller, profitable and well-capitalized institutions that rely more on traditional retail banking originate most mortgage credit.

Citation

Duqi, A., McGowan, D., Onali, E., & Torluccio, G. (2021). Natural disasters and economic growth: The role of banking market structure. Journal of Corporate Finance, 71, Article 102101. https://doi.org/10.1016/j.jcorpfin.2021.102101

• Journal Article Type: Article
• Acceptance Date: Sep 27, 2021
• Online Publication Date: Oct 21, 2021
• Publication Date: Oct 21, 2021
• Deposit Date: Jun 10, 2024
• Journal: Journal of Corporate Finance
• Print ISSN: 0929-1199
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 71
• Article Number: 102101
• DOI: https://doi.org/10.1016/j.jcorpfin.2021.102101
• Public URL: https://durham-repository.worktribe.com/output/2480842
• Additional Information: This article is maintained by: Elsevier; Article Title: Natural disasters and economic growth: The role of banking market structure; Journal Title: Journal of Corporate Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jcorpfin.2021.102101; Content Type: article; Copyright: © 2021 The Authors. Published by Elsevier B.V.