Bank Presence and Local Disaster Resilience

Abstract

Using data on the federal declaration of disasters in contiguous U.S. counties and the presence of brick and mortar bank branches in each county, we show that a greater presence of bank branches reduces the disasters’ impairment on the number of employees, total annual payroll, and the number of establishments in the local business sector. The presence of bank branches also mitigates the disastrous impact on overall local employment and personal wealth. Our findings demonstrate that the physical presence of banking service enhances the resilience of a local economy to disasters significantly, in line with the findings of the previous literature that banks respond to the up rise in credit demand in disaster-affected areas.