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Banks versus Hurricanes: A Case Study of Puerto Rico after Hurricanes Irma and Maria

Abstract: We study Puerto Rico’s experience after the severe hurricane season of 2017 to better understand how extreme weather disasters affect bank stability and their ability to lend. Despite the devastation wrought by two category 5 hurricanes in a single month, we find relatively modest and transitory impacts on bank performance with no evident decline in lending capacity. We discuss various mitigants that help limit bank exposure to extreme weather and whether these mitigants may be vulnerable given the potential for more severe and more impactful climate events.

Keywords: climate change; physical risks; hurricanes; banks; Puerto Rico;

JEL Classification: G21; Q54;


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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2023-11-01

Number: 1078