Borrowers Under Water! Rare Disasters, Regional Banks, and Recovery Lending
Journal of Financial Intermediation,
We show that local banks provide corporate recovery lending to firms affected by adverse regional macro shocks. Banks that reside in counties unaffected by the natural disaster that we specify as macro shock increase lending to firms inside affected counties by 3%. Firms domiciled in flooded counties, in turn, increase corporate borrowing by 16% if they are connected to banks in unaffected counties. We find no indication that recovery lending entails excessive risk-taking or rent-seeking. However, within the group of shock-exposed banks, those without access to geographically more diversified interbank markets exhibit more credit risk and less equity capital.
Economy in Shock – Fiscal Policy to Counteract The coronavirus pandemic is triggering a severe recession in Germany....
Members & Research Doctoral Students Annika Backes ; Doctoral thesis project: tba Dmitri Bershadskyy ; Doctoral thesis project: "Experimental Analysis...
The Economic Impact of Changes in Local Bank Presence
This study analyzes the economic consequences of changes in the local bank presence. Using a unique data set of banks, firms and counties in Poland over the period 2009–14, it is shown that changes strengthening the relationship banking model are associated with local labour market improvements and easier small and medium-sized enterprise access to bank debt. However, only the appearance of new, more aggressive owners of large commercial banks stimulates new firm creation.
Four Research Clusters ...
IWH Alumni The IWH would like to stay in contact with its former employees. We...
Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected...
Brown Bag Seminar
Brown Bag Seminar Financial Markets Department The seminar series "Brown...
Centre for Evidence-based Policy Advice
Centre for Evidence-based Policy Advice (IWH-CEP) ...
What Drives Banks‘ Geographic Expansion? The Role of Locally Non-diversifiable Risk
IWH Discussion Papers,
We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.