Brown Bag Seminar with Oliver Rehbein

We’re excited to share that VGSF affiliated faculty member Oliver Rehbein will present his joint work with Sophia Arlt (Deutsche Bundesbank, Goethe University Frankfurt), Christian Groß (Deutsche Bundesbank), and Iliriana Shala (Deutsche Bundesbank, Goethe University Frankfurt), titled “When the Dam Almost Breaks: Disasters and Credit Risk”, at the Brown Bag Seminar at the Vienna University of Economics and Business on May 21, 2025.

Abstract:

How does risk perception in credit markets change after observing a nearby catastrophic event? We combine detailed geospatial data on ex-ante flood risk of German firms with credit register data and show that after a major flood in 2021, loan rates decrease for high-flood risk firms that were not directly affected. This negative indirect effect is strongest for banks with a large loan portfolio exposure to the flood. Firms that were affected by earlier, but similar floods do not experience rate reductions. The decrease is also strongest in areas with low climate change belief, while high climate change belief areas experience rate increases. Overall, our evidence points to a novel near-miss effect in lending markets after natural disasters, where a close disaster „miss“ may be misinterpreted as a reduction in fundamental risk.