Resilient Finance, Stratified Costs: Unmasking Racial Disparities in Disaster-Induced Bank Closures

Key Points

• The aim is to examine how disaster-induced bank closures affect mortgage credit for different racial groups.
• Estimated race-specific difference-in-differences using matched mortgage applications and disaster data.
• Analyzed impacts in disaster counties versus adjacent areas concerning bank closures and credit appropriation.
• Focused on nonprice margin shifts like debt-to-income ratios instead of outright denials.
• In disaster counties, Black borrowers faced tighter credit conditions reflected in higher debt-to-income ratios.
• Spillover effects in adjacent counties led to tighter selection and longer maturities for mortgage products.
• Resilience of bank branch networks is critical for equitable recovery after disasters.