Published in:De Nederlandsche Bank Working Paper ; No. 730, 2021
Extent:
1 Online-Ressource (50 p)
Language:
English
DOI:
10.2139/ssrn.3961290
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 2, 2021 erstellt
Description:
If climate change continues unabated, extreme weather events are expected to occur more frequently. Rising flood incidence will especially affect low-lying countries, both through property damage and macro-financial adversity. Using a stress test framework and geocoded data on real-estate exposures for Dutch banks, we study when floods would start impairing financial stability. We find that the banking sector is capitalised sufficiently to withstand floods in unprotected areas, where there is relatively little real estate. However, capital depletions would increase quickly in case more severe floods hit the densely-populated western part of the Netherlands. These findings have possible implications for various policy areas, including macroprudential policy