Community bank liquidity: Natural disasters as a natural experiment

Kyle D. Allen; Matthew D. Whitledge; Drew B. Winters

doi:10.1016/j.jfs.2022.101002

Community bank liquidity: Natural disasters as a natural experiment

Kyle D. Allen, Matthew D. Whitledge, Drew B. Winters

Business Administration

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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particular, we find that they respond to the liquidity needs of their communities by increasing loans as deposits are withdrawn.

Original language	English
Article number	101002
Journal	Journal of Financial Stability
Volume	60
DOIs	https://doi.org/10.1016/j.jfs.2022.101002
State	Published - Jun 2022

Keywords

Community bank
Liquidity
Natural disaster

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10.1016/j.jfs.2022.101002

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@article{b1db1546bc0e4bd79e28fa93bdb5406a,

title = "Community bank liquidity: Natural disasters as a natural experiment",

abstract = "We examine how community banks respond to liquidity shocks created by natural disasters. We address community banks{\textquoteright} responses to liquidity shocks due to their focused geographic and economic presence, which coincide with their communities{\textquoteright} 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particular, we find that they respond to the liquidity needs of their communities by increasing loans as deposits are withdrawn.",

keywords = "Community bank, Liquidity, Natural disaster",

author = "Allen, {Kyle D.} and Whitledge, {Matthew D.} and Winters, {Drew B.}",

note = "Funding Information: We appreciate the helpful comments and suggestions of the anonymous reviewers. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: {\textcopyright} 2022 Elsevier B.V.",

year = "2022",

month = jun,

doi = "10.1016/j.jfs.2022.101002",

language = "English",

volume = "60",

journal = "Journal of Financial Stability",

issn = "1572-3089",

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T1 - Community bank liquidity

T2 - Natural disasters as a natural experiment

AU - Allen, Kyle D.

AU - Whitledge, Matthew D.

AU - Winters, Drew B.

N1 - Funding Information: We appreciate the helpful comments and suggestions of the anonymous reviewers. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: © 2022 Elsevier B.V.

PY - 2022/6

Y1 - 2022/6

N2 - 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.

AB - 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.

KW - Community bank

KW - Liquidity

KW - Natural disaster

UR - http://www.scopus.com/inward/record.url?scp=85127763233&partnerID=8YFLogxK

U2 - 10.1016/j.jfs.2022.101002

DO - 10.1016/j.jfs.2022.101002

M3 - Article

AN - SCOPUS:85127763233

VL - 60

JO - Journal of Financial Stability

JF - Journal of Financial Stability

SN - 1572-3089

M1 - 101002

ER -

Community bank liquidity: Natural disasters as a natural experiment

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Keywords

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