Spatially Mapping Banks' Commercial & Industrial Loan Exposures: Including an Application to Climate-Related Risks
Abstract
The correlation of the spatial distribution of banking exposures with changes in spatial patterns of economic activity (e.g., internal migration, changes in agglomeration patterns, climate change, etc.) may have financial stability implications. We therefore study the spatial distribution of large U.S. banks' commercial and industrial (C&I) lending portfolios. We construct a novel dataset that augments FR Y-14Q regulatory data with borrower microdata for a more granular understanding of where banks' exposures are located by looking beyond headquarters to the location of facilities. We find that banks are exposed to almost all U.S. counties, with clustered exposure in certain geographies. We then use our dataset for a climate-related application by analyzing what fraction of C&I loans have been extended to firms that operate in areas vulnerable to physical risks, identifying, for example, counties where both (i) banks are highly exposed via their lending portfolios, and (ii) physical risks have historically resulted in large losses. Results of this kind can help inform risk management and be used to improve resilience to future stresses.
Finance and Economics Discussion Series Federal Reserve Board, Washington, D.C. ISSN 1936-2854 (Print) ISSN 2767-3898 (Online) Spatially Mapping Banks’ Commercial & Industrial Loan Exposures: Including an Application to Climate-Related Risks Benjamin N. Dennis, Gurubala Kotta, Caroline Conley Norris 2025-006 Please cite this paper as: Dennis,BenjaminN., GurubalaKotta,andCarolineConleyNorris(2025). “SpatiallyMappingBanks’Commercial&IndustrialLoanExposures: IncludinganApplicationtoClimate- Related Risks,” Finance and Economics Discussion Series 2025-006. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2025.006. NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the Finance and Economics Discussion Series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers.
Cite this document
Benjamin N. Dennis, Gurubala Kotta, & and Caroline Conley Norris (2025). Spatially Mapping Banks' Commercial & Industrial Loan Exposures: Including an Application to Climate-Related Risks (FEDS 2025-006). Board of Governors of the Federal Reserve System, Finance and Economics Discussion Series. https://whenthefedspeaks.com/doc/feds_2025-006
@techreport{wtfs_feds_2025_006,
author = {Benjamin N. Dennis and Gurubala Kotta and and Caroline Conley Norris},
title = {Spatially Mapping Banks' Commercial & Industrial Loan Exposures: Including an Application to Climate-Related Risks},
type = {Finance and Economics Discussion Series},
number = {2025-006},
institution = {Board of Governors of the Federal Reserve System},
year = {2025},
url = {https://whenthefedspeaks.com/doc/feds_2025-006},
abstract = {The correlation of the spatial distribution of banking exposures with changes in spatial patterns of economic activity (e.g., internal migration, changes in agglomeration patterns, climate change, etc.) may have financial stability implications. We therefore study the spatial distribution of large U.S. banks' commercial and industrial (C&I) lending portfolios. We construct a novel dataset that augments FR Y-14Q regulatory data with borrower microdata for a more granular understanding of where banks' exposures are located by looking beyond headquarters to the location of facilities. We find that banks are exposed to almost all U.S. counties, with clustered exposure in certain geographies. We then use our dataset for a climate-related application by analyzing what fraction of C&I loans have been extended to firms that operate in areas vulnerable to physical risks, identifying, for example, counties where both (i) banks are highly exposed via their lending portfolios, and (ii) physical risks have historically resulted in large losses. Results of this kind can help inform risk management and be used to improve resilience to future stresses.},
}