The impact of natural disasters on household debt: evidence from 2014 China family panel studies

Based on data from the 2014 China Family Panel Studies, we investigate the causal relationship between natural disasters and household debt using ordinary least squares and propensity score matching. This paper found that natural disasters can not only increase the probability of households owning debt but also have a significant positive impact on the number of household debt. The results of heterogeneity analysis show that natural disasters have a greater impact on families with large sizes and high-consumption levels. Mechanism checks suggest that household income and individual’s health are shown to be the potential mechanism through which the impact of natural disasters on household debt.