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Shaken, stirred and indebted: Firm-level effects of earthquakes

Author

Listed:
  • Arin, K. Peren
  • Marti Arnau, Josep
  • Boduroglu, Elif
  • Celik, Esref Ugur

Abstract

Using firm-level data from Turkiye, we investigate the effects of earthquakes on firms’ balance sheets. We find that earthquakes increase firms’ liabilities but have a smaller effect on firms’ assets, both in magnitude and significance. Using surveys sent to the finance and/or accounting managers of the largest 100 firms in Turkiye we identify common themes in their perceptions. Our findings reveal a consensus among respondents attributing the increased liabilities to exchange rate depreciation and lower business activity following a disaster. Conversely, higher availability of external credit is associated with a decrease in liabilities. Our analysis also indicates that finance managers with higher educational attainment may be underestimating the effects of earthquakes.

Suggested Citation

  • Arin, K. Peren & Marti Arnau, Josep & Boduroglu, Elif & Celik, Esref Ugur, 2024. "Shaken, stirred and indebted: Firm-level effects of earthquakes," The Quarterly Review of Economics and Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:quaeco:v:97:y:2024:i:c:s1062976924001005
    DOI: 10.1016/j.qref.2024.101894
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    More about this item

    Keywords

    Natural disasters; Firm-level data; Survey data; Perceptions; Causality; Difference-in-difference;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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