We Didn’t Start the Fire: Effects of a Natural Disaster on Consumers’ Financial Distress

Anson Ho (), Kim Huynh, David Jacho-Chávez and Geneviève Vallée

Staff Working Papers from Bank of Canada

Abstract: Global climate change is increasing the frequency and severity of natural disasters. We use detailed consumer credit data to investigate the impact of the 2016 Fort McMurray wildfire, the costliest wildfire disaster in Canadian history, on consumers’ financial stress. We focus on the arrears of insured mortgages because of their important implications for financial institutions and insurers’ business risk and relevant management practices. Our findings suggest that wildfires have caused more mortgage arrears in severely damaged areas, with both economic and statistical significance. For other areas with relatively minor damage, the increase in arrears is small and statistically insignificant.

Keywords: Climate change; Credit and credit aggregates; Econometric and statistical methods; Financial stability (search for similar items in EconPapers)
JEL-codes: C21 D12 G21 Q54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2023-02
New Economics Papers: this item is included in nep-ban and nep-env
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Journal Article: We didn’t start the fire: Effects of a natural disaster on consumers’ financial distress (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:23-15

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