Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297449 
Year of Publication: 
2024
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2024-1
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper explores the impact of extreme weather exposures on the financial outcomes of low-income households. Using a novel dataset comprising individual-level payday loan applications and loan-level information, we find that extreme temperature days-both hot and cold-lead to surges in demand for payday loans. An increase in the number of days with extreme heat results in an increase in delinquency and default rates and a reduction of total credit issued, indicating a contraction in loan supply. These effects are especially noticeable for online payday loans. Our findings highlight the heightened financial vulnerability of low-income households to environmental shocks and underscore the need for targeted policies.
Subjects: 
Climate change
Credit and credit aggregates
JEL: 
Q54
G50
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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