Sea Level Rise, Collateral Constraints, and Entrepreneurship

15:40-17:00, Friday, March 7, 2025

I-206, Boxue Building

Dr. Yang ZHOU is an associate professor and doctoral supervisor at the Economics and Management School of Wuhan University. His main research areas are household finance and corporate finance. He has published more than 20 papers in journals such as Journal of Financial and Quantitative Analysis, Journal of International Business Studies, Research Policy, Journal of Banking and Finance, Journal of Economic Behavior and Organization, Journal of Business Finance and Accounting, Jirong Yanjiu (Chinese Journal), and Zhongguo Nongcun Jingji (Chinese Journal). He has presided over two projects of National Natural Science Foundation of China and one project of Humanities and Social Science Research Fund of Ministry of Education.

Sea level rise (SLR) is one of the most salient climate risks. Using very granular variations in SLR exposure and disaggregated geographic information on households in the United States, we find that households exposed to SLR are less likely to engage in entrepreneurship than their unexposed counterparts within the same zip code. This effect is driven by long-run SLR risks rather than short-run flood risks and is amplified when attention to or belief in climate change is high. We also show that SLR exposed households are less likely to extract home equity and extract lower amounts of home equity. For cash-out refinancing loans, lenders are more inclined to deny applications, impose higher interest rates, and appraise lower loan amounts if the properties in question face a higher SLR risk. These findings suggest that collateral constraints are likely the mechanism underlying the negative impact of SLR exposure on entrepreneurship.

For more information of the seminar, scan the following QR code(s) to join Tencent QQ group (904 544 292) or WeChat group named "IAER Seminar (5)", please.

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(QR code is valid until March 24, 2025)