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Banking stability, natural disasters, and state fragility: Panel VAR evidence from developing countries

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  • Albuquerque, Pedro H.
  • Rajhi, Wassim

Abstract

Panel VAR methodology is used in this study to empirically evaluate the effects of natural disasters and state fragility on economic and financial dimensions in developing countries such as GDP per capita, banking and financial system deposits, banks’ Z-scores, and non-performing loans. Results based on three panels of up to 66 countries and 17 years of annual data indicate that natural disasters and state fragility may cause significant economic and financial disruption in low-income and middle-income countries. Shocks from natural disasters seem to be temporary and detrimental only to non-performing loans, while shocks from state fragility appear to be permanent and to create detrimental economic and financial feedback loops.

Suggested Citation

  • Albuquerque, Pedro H. & Rajhi, Wassim, 2019. "Banking stability, natural disasters, and state fragility: Panel VAR evidence from developing countries," Research in International Business and Finance, Elsevier, vol. 50(C), pages 430-443.
    • Handle: RePEc:eee:riibaf:v:50:y:2019:i:c:p:430-443
    DOI: 10.1016/j.ribaf.2019.06.001
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    6. Wan-Li Zhang & Chun-Ping Chang & Yang Xuan, 2022. "The impacts of climate change on bank performance: What’s the mediating role of natural disasters?," Economic Change and Restructuring, Springer, vol. 55(3), pages 1913-1952, August.
    7. Celil, Hursit S. & Oh, Seungjoon & Selvam, Srinivasan, 2022. "Natural disasters and the role of regional lenders in economic recovery," Journal of Empirical Finance, Elsevier, vol. 68(C), pages 116-132.
    8. Marcinkowska, Monika & Brzeszczyński, Janusz & Charteris, Ailie & Gajdka, Jerzy & Obojska, Lidia & Szczygielski, Jan Jakub, 2025. "Sustainability, energy finance and the role of central banks: A review of current insights and future research directions," Energy Economics, Elsevier, vol. 144(C).
    9. Katarzyna Boratynska, 2021. "Determinants of Economic Fragility in Central and Eastern European Countries FsQCA Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(3 - Part ), pages 827-837.
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    11. Zhong Fang & Yung-ho Chiu & Tai-Yu Lin & Tzu-Han Chang & Yi-Nuo Lin, 2024. "Analysis of natural disasters and energy efficiency in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 10999-11026, May.

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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