Do weather disasters affect banks’ systemic risks? Two channels that confirm it

ABSTRACT

This study investigates whether weather disasters affect financial stability through the channels of the deposit-to-loans ratio and non-performing loans. The results document that the disaster channel is a source of financial instability for US banks. They recommend the urgent prevention of natural disasters by improving pollution treatment technology, leading to reduced greenhouse gases emissions.

KEYWORDS:

• Weather disasters
• climate change
• loans-to-assets ratio
• non-performing loans
• US banks

JEL CLASSIFICATION:

• G21
• Q54

Disclosure statement

No potential conflict of interest was reported by the author(s).