Impact of Disasters on Family Businesses and Local Banks

Natural and man-made disasters—such as floods, fires, industrial accidents, and economic crises—can have serious consequences not only for local communities but also for companies and financial institutions. The project aims to investigate how such events influence the financial decisions of family businesses and local banks, and how the effects of these shocks spread through their interconnectedness.

Family businesses and local banks are often deeply embedded in the local economy. They are also particularly vulnerable to disruptions, yet they may respond differently than larger and more diversified entities. For example, local companies may demonstrate greater financial caution or a stronger commitment to preventive measures. Local banks may change their approach to lending and risk assessment, especially if their management has previously experienced disasters.

The project will combine data from various sources: information on disasters, the financial performance of companies and banks, and the biographies of board members and directors. Using modern data analysis and econometrics, we will examine how personal experiences of disasters influence financial decisions and risk appetite.

The project will provide new insights into how companies and banks adapt to extreme events. It will also help policymakers understand which organizations are most vulnerable and how to build more resilient financial systems.