Banks Cut Lending 15-20% to Flood-Risk Firms After Major Events, NBER Study Shows
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This NBER study analyzed loan-level data from U.S. commercial banks, matched with FEMA flood maps and historical flood events from 2001 to 2024, using a difference-in-differences approach to compare lending before and after floods in high-risk versus low-risk zones. Key findings show banks reduce lending to firms in high-risk flood zones by 15-20% following major floods, with the drop persisting up to three years. Small businesses suffer most, facing credit contractions that slow regional economies. The research highlights how climate risks directly tighten credit, affecting business survival and growth in vulnerable areas.
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Key Entities
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National Bureau of Economic Research (NBER) Organization
Leading U.S. think tank publishing peer-reviewed economic studies.
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Climate Risk and Bank Lending Organization
Examines how floods reduce credit to firms in U.S. flood zones.
Bias Distribution
Multi-Perspective Analysis
Left-Leaning View
Banks' discriminatory lending cuts to flood-risk firms, especially small businesses in vulnerable communities, exacerbate climate change inequities and demand regulatory intervention to protect the economy.
Centrist View
NBER study reveals banks prudently reduce lending by 15-20% to flood-prone firms after major events, with persistent effects hitting small businesses hardest and slowing regional growth.
Right-Leaning View
Banks wisely tighten lending to flood-risk firms by 15-20% post-disasters, protecting investors from reckless loans to high-risk areas and promoting fiscal responsibility over government bailouts.
Source & Verification
Source: Nber
Status: AI Processed
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