Ricardo Correa: The Rising Tide Lifts Some Interest Rates: Climate Change, Natural Disasters and Loan Pricing - 27 September 2021

The Qatar Centre for Global Banking & Finance welcomes Dr Ricardo Correa from the Board of Governors of the Federal Reserve System to present this research seminar on 'The rising tide lifts some interest rates: climate change, natural disasters and loan pricing'.

Following a climate change-related disaster, interest rates on loans of at-risk but unaffected borrowers spike both in the primary and secondary markets. Consistent with time-varying attention to climate change, effects are amplified when attention to climate change is high, and there is no such effect for disasters that do not get worse with climate change. Borrowers with the largest exposure to climate change, and those with the least ability to absorb adverse shocks, suffer the highest increase in rates. Firms react by reducing investment and increasing cash reserves.

In this virtual seminar, Dr Ricardo Correa will investigate the effect of climate change, through natural disasters, on corporate borrowing costs, using novel data to construct granular measures of borrowers’ exposure to various natural disasters.

Ricardo Correa is a Deputy Associate Director in the International Finance Division at the Board of Governors of the Federal Reserve System. He conducts policy analysis in the areas of international banking and financial stability and his research focuses on banking, empirical corporate finance, and international finance topics. His work has been published in the Journal of Financial Economics, Review of Financial Studies, and Journal of Financial Intermediation, amongst others. He received a Ph.D. in economics from Columbia University and a B.A. in economics from the Universidad de los Andes in Bogotá, Colombia.