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Discussion Paper

The Adverse Effect of “Mandatory” Flood Insurance on Access to Credit


Abstract: The National Flood Insurance Program (NFIP) was designed to reduce household and lender flood-risk exposure and encourage lending. In this post, which is based on our related study, we show that in certain situations the program actually limits access to credit, particularly for low-income borrowers—an unintended consequence of this well-intentioned program.

Keywords: flood maps; climate change; bank lending; regulation; unintended consequences;

JEL Classification: D14; G52;

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Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2022-05-23

Number: 20220523