Does Historical Climate Influence Corporate Resilience to Crises?

The persistence of climate-driven cooperation plays an important role for firms’ resilience to economic downturns. We hypothesize that the weather-induced social capital reduces financial obstacles for firms and enhances corporate resilience to crises. Our results based on high-resolution weather data show that pre-industrial weather uncertainty endowed firms with less financial obstacle, especially in areas with higher incentives to cooperate to insure against weather risks in history. Long-run weather risks have positive impacts on firms’ survival and recovery from crises of systemic banking crises and COVID-19 because that greater level of social capital enables more lending from banks and supply chains.