Template-Type: ReDIF-Paper 1.0
Title: Flooded Through the Back Door: Firm-Level Effects of Banks' Lending Shifts
Author-Name: Oliver Rehbein
Author-Email: Oliver.rehbein@uni-bonn.de
Classification-JEL: G21, G29, E44, E24
Keywords: natural disaster, real effects, shock transmission, bank capital

Abstract: I show that natural disasters transmit to firms in non-disaster areas via their banks. 
This spillover of non-financial shocks through the banking system is stronger for banks 
with less regulatory capital. Firms connected to a disaster-exposed bank with below median capital, 
reduce their employment by 11\% and their fixed assets by 20\% compared to firms in the same region 
without such a bank during the 2013 flooding in Germany. Low bank capital thus carries a negative 
externality because it amplifies regional shock spillovers. I show that bank liquidity, and firm 
capital and liquidity are less relevant to prevent shock transmission.
Note: 
Length: 70
Creation-Date: 2018-09
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp043
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_043v1