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What Do Quasi-Experiments Tell Us About the Response of Banks and Their Depositors to Natural Disasters?

Author

Listed:
  • Barth, James R.

    (Auburn University, Alabama, U.S.A)

  • Lee, Kang-Bok

    (Auburn University, Alabama, U.S.A)

  • Yoon, Yeosong

    (University of Tampa, Florida, U.S.A)

Abstract

Over the past two decades, more than 11,000 U.S. counties have been impacted by natural disasters. This study investigates how banks and their depositors respond to such events using a difference-in-difference-in-differences (DDD) methodology combined with coarsened exact matching (CEM). Analyzing 1.3 million observations from 1999 to 2017, we find that natural disasters lead to a significant increase in deposit rates but do not affect the volume of deposits. Our findings suggest that banks raise deposit rates to counteract the potential withdrawal of funds, thereby maintaining stable deposit levels. This research provides new insights into the causal dynamics of deposit supply and demand in the face of natural disasters.

Suggested Citation

  • Barth, James R. & Lee, Kang-Bok & Yoon, Yeosong, 2024. "What Do Quasi-Experiments Tell Us About the Response of Banks and Their Depositors to Natural Disasters?," American Business Review, Pompea College of Business, University of New Haven, vol. 27(2), pages 607-622, November.
    • Handle: RePEc:ris:ambsrv:0116
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    File URL: https://digitalcommons.newhaven.edu/americanbusinessreview/vol27/iss2/9/
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    More about this item

    Keywords

    Natural Disasters; Banks; Deposits; Deposit Rates; Difference-in-Difference-in-Differences; Bank Branches;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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