Publication detail

Natural Catastrophes and Financial Development: An Empirical Analysis

Author(s): prof. Roman Horváth Ph.D.,
Type: IES Working Papers
Year: 2020
Number: 14
Published in: IES Working Papers 14/2020
Publishing place: Prague
Keywords: Natural catastrophes, financial development, synthetic control method.
JEL codes: G00, O11, Q54, Q56
Suggested Citation: Horvath R. (2020): "Natural Catastrophes and Financial Development: An Empirical Analysis" IES Working Papers 14/2020. IES FSV. Charles University.
Abstract: We estimate the causal effect of natural catastrophes on financial development. We focus on largest catastrophes in developing economies in 1960-2016, employ synthetic control method to compute the counterfactual and use the credit to GDP ratio as the measure of financial development. Our estimates show that the effects of natural catastrophes are sizable, statistically significant and long-lasting. We find that a decade after the catastrophe, credit/GDP ratio remains approximately 30% below its counterfactual. This result suggests that large-scale natural catastrophes severely undermine financial intermediation in developing economies.
Downloadable: wp_14_2020_horvath


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