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Community bank liquidity: Natural disasters as a natural experiment

Author

Listed:
  • Allen, Kyle D.
  • Whitledge, Matthew D.
  • Winters, Drew B.

Abstract

We examine how community banks respond to liquidity shocks created by natural disasters. We address community banks’ responses to liquidity shocks due to their focused geographic and economic presence, which coincide with their communities’ exposure to the disasters and the ability of the local banks to meet their needs. We find that community banks respond to liquidity shocks by managing their balance sheet, rather than any single balance sheet account. In particular, we find that they respond to the liquidity needs of their communities by increasing loans as deposits are withdrawn.

Suggested Citation

  • Allen, Kyle D. & Whitledge, Matthew D. & Winters, Drew B., 2022. "Community bank liquidity: Natural disasters as a natural experiment," Journal of Financial Stability, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finsta:v:60:y:2022:i:c:s1572308922000304
    DOI: 10.1016/j.jfs.2022.101002
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    References listed on IDEAS

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    Cited by:

    1. Pan, Changchun & Huang, Yuzhe & Jin, Long, 2024. "Natural disasters and corporate tax burden: Evidence from chinese energy sector," Energy Economics, Elsevier, vol. 130(C).
    2. Lin, Boqiang & Wang, You, 2024. "How does natural disasters affect China agricultural economic growth？," Energy, Elsevier, vol. 296(C).
    3. Joel Huesler, 2024. "Impact of tropical storms on the banking sector in the British Colonial Caribbean," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 18(3), pages 653-690, September.
    4. repec:liv:livedp:202219 is not listed on IDEAS

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    More about this item

    Keywords

    Community bank; Natural disaster; Liquidity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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