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Discussion Paper
Banks versus Hurricanes
The impacts of hurricanes analyzed in the previous post in this series may be far-reaching in the Second District. In a new Staff Report, we study how banks in Puerto Rico fared after Hurricane Maria struck the island on September 17, 2017. Maria makes a worst case in some respects because the economy and banks there were vulnerable beforehand, and because Maria struck just two weeks after Hurricane Irma flooded the island. Despite the immense destruction and disruption Maria caused, we find that the island’s economy and banks recovered surprisingly quickly. We discuss the various ...
Report
Banks versus Hurricanes: A Case Study of Puerto Rico after Hurricanes Irma and Maria
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.