Papers

"Firms’ Borrowing Costs and Neighbors’ Flood Risk"

Published in Small Business Economics
 

Authors:
Thomas Bassetti | DSEA University of Padua
Lorenzo Dal Maso | University of Bologna
Valentina Pieroni | IMT School for Advanced Studies Lucca

 
 

This study examines whether Italian firms exposed to climate risks face higher borrowing costs due to spatial spillovers. Using 419,040 firm-year observations from 2016 to 2019, the authors find a positive link between a firm’s debt costs and its neighborhood’s climate risk. Small businesses are particularly affected due to their lack of financial diversification, poor bargaining power, and strong reliance on credit.

 

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