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

Author

Listed:
  • Pedro Albuquerque

    (KEDGE Business School [Marseille], AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Wassim Rajhi

    (Independent Researcher)

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

  • Pedro Albuquerque & Wassim Rajhi, 2019. "Banking stability, natural disasters, and state fragility: Panel VAR evidence from developing countries," Post-Print hal-02270791, HAL.
    • Handle: RePEc:hal:journl:hal-02270791
    DOI: 10.1016/j.ribaf.2019.06.001
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-02270791v1
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    Cited by:

    1. Charles Morrison & John Gartchie Gatsi & Samuel Kwaku Agyei & Mac Junior Abeka, 2025. "Natural Hazards and Financial Development in Sub-Saharan Africa: The Moderating Role of the Stage of Development," Economics of Disasters and Climate Change, Springer, vol. 9(1), pages 135-163, March.
    2. Di Tommaso, Caterina & Foglia, Matteo & Pacelli, Vincenzo, 2023. "The impact and the contagion effect of natural disasters on sovereign credit risk. An empirical investigation," International Review of Financial Analysis, Elsevier, vol. 87(C).
    3. Muhammad Tariq Iqbal Khan & Sofia Anwar & Samuel Asumadu Sarkodie & Muhammad Rizwan Yaseen & Abdul Majeed Nadeem & Qamar Ali, 2023. "Natural disasters, resilience-building, and risk: achieving sustainable cities and human settlements," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 118(1), pages 611-640, August.
    4. Hassan Alalmaee, 2024. "Natural Disasters and Banking Stability," Economies, MDPI, vol. 12(2), pages 1-24, January.
    5. Sandeep Yadav, 2020. "Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India," Indian Journal of Corporate Governance, , vol. 13(2), pages 227-252, December.
    6. 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.
    7. repec:ers:journl:v:xxiv:y:2021:i:3b:p:827-837 is not listed on IDEAS
    8. Vinzenz Peters, 2025. "How Banks are Impacted by and Mediate the Economic Consequences of Natural Disasters and Climate Shocks: A Review," De Economist, Springer, vol. 173(1), pages 47-85, March.
    9. 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.
    10. 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.
    11. 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).
    12. 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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    Keywords

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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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