The shocks of natural disasters on NPLs: Global evidence

The relationship between natural disasters and NPLs is of significant importance in the natural disaster economics field. Thus, this research investigates the effects of natural disasters on non-performing loans (NPLs) using panel data covering 101 countries from 1996 to 2017. We introduce interaction terms between natural disasters and different financial risks to represent the moderating effects of natural disasters through such risks. Several conclusions arise from the empirical results. (1) Natural disasters produce significant effects on NPLs both in current year and five-period lag terms. (2) Natural disasters increase NPLs through five kinds of financial risks, and the moderating effects are statistically significant. (3) The effects of natural disasters on NPLs present significant heterogeneity between OECD and non-OECD countries. From these results, we put forward several policy implications.