Economic resilience to physical climate shocks: The roles of financial and firm structures

This thesis investigates how local economies can become more resilient to extreme weather events such as floods, storms, and heavy rainfall – events that are expected to increase in frequency and intensity due to climate change. It explores the roles of local banks and businesses in supporting recovery after such shocks, focusing on cases from Europe, China, and the United States. The findings show that local financial and firm structures significantly influence the speed and strength of economic recovery. For instance, areas banked by small, local banks and areas with a higher share of young and small businesses tend to recover more effectively. The thesis also finds that firms with high levels of short-term debt are more vulnerable to climate shocks, while access to long-term financing can enhance resilience. Overall, the research highlights that fostering local entrepreneurship and strengthening community-based financial systems are key strategies for building more climate-resilient economies.