nep-mfd 2025-09-22 papers

on Microfinance

Issue of 2025–09–22
one paper chosen by
Marco Novarese, Università degli Studi del Piemonte Orientale

Disasters and lending signals: From borrower information to community characteristics By Beyene, Winta

Disasters and lending signals: From borrower information to community characteristics

By:	Beyene, Winta
Abstract:	I study the informational value of community resilience in credit markets during natural disasters. Exploiting a severe flood in Germany in 2013, I combine loan-level data on car loans with a composite measure of community resilience based on structural local characteristics linked to disaster recovery capacity. After the flood, only low-income borrowers faced credit tightening, but in high-resilience areas they experienced smaller rate hikes and maintained access to credit. Resilience also predicts repayment after disasters, yet banks ignore it in normal times. This state-contingent reliance shows that community resilience enters credit pricing only in crises, when its information content beyond standard borrower characteristics is valuable enough to justify adoption.
Keywords:	Financial resilience, natural disasters, social capital, consumer credit
Date:	2025
URL:	https://d.repec.org/n?u=RePEc:zbw:safewp:325484

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