Firms’ Management of Infrequent Shocks

Benjamin Collier, Andrew Haughwout, Howard C. Kunreuther, Erwann Michel-Kerjan and Michael A. Stewart

No 22612, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine businesses’ financial management of a rare, severe event using detailed firm-level data collected following Hurricane Sandy in the New York area. Credit played a prominent role in financing recovery; more negatively affected firms took on debt because of Sandy (38%) than received insurance payments (15%) in our data. Negatively affected firms were often credit constrained after the shock. While firms’ demand for insurance is often explained by financing frictions, we find that the most credit constrained firms after the event, younger firms and smaller firms, were the least likely to insure before it.

JEL-codes: D22 G22 G28 G32 L25 Q54 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-rmg, nep-sbm and nep-sog
Note: PE
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Citations: View citations in EconPapers (8)

Published as BENJAMIN L. COLLIER & ANDREW F. HAUGHWOUT & HOWARD C. KUNREUTHER & ERWANN O. MICHEL‐KERJAN, 2020. "Firms’ Management of Infrequent Shocks," Journal of Money, Credit and Banking, vol 52(6), pages 1329-1359.

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Journal Article: Firms’ Management of Infrequent Shocks (2020)
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