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Natural Disasters and International Financial Accessibility in Developing Countries

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  • Jiyoun An

    (College of International Studies Kyung Hee University 1732 Deogyoung-daero Giheung-gu, Yongin-si, Republic of Korea)

  • Bokyeong Park

    (Graduate School of Pan-Pacific International Studies Kyung Hee University 1732 Deogyoung-daero Giheung-gu, Yongin-si, Republic of Korea)

Abstract

This study examines the impact of natural disasters on affected countries’ accessibility to international financial resources. We find empirical evidence that natural disasters significantly downgrade the sovereign credit rating of an affected country, an indicator of international financial accessibility. This finding is robust in developing countries, implying that they are faced with additional difficulties in financing post-disaster recovery costs compared with developed countries. Among disasters, droughts and storms display a particularly significant downgrading effect. Further results show that foreign aid from the international community helps to improve the accessibility, implying a possible acceleration of the post-disaster recovery in recipient countries.

Suggested Citation

  • Jiyoun An & Bokyeong Park, 2019. "Natural Disasters and International Financial Accessibility in Developing Countries," Asian Economic Papers, MIT Press, vol. 18(1), pages 245-261, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:18:y:2019:i:1:p:245-261
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    Cited by:

    1. Richard S. J. Tol, 2022. "State capacity and vulnerability to natural disasters," Chapters, in: Mark Skidmore (ed.), Handbook on the Economics of Disasters, chapter 20, pages 434-457, Edward Elgar Publishing.

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