Natural Disasters and Financial Technology Adoption

Abstract

This paper investigates the adoption of financial technology, with a specific focus on the introduction of a new instant payment technology called PIX by the Brazilian Central Bank. To assess adoption patterns, we use Brazilian data and leverage the occurrence of natural disasters in Brazilian municipalities as an exogenous variation. Our empirical findings indicate that adopting the new payment technology increases after a natural disaster, with increases in transaction volume ranging from 6.4% to 8.9% after eight months. Furthermore, we document that changes in other banking transactions do not drive these findings. We also conduct a series of analyses to confirm the robustness of our results in the context of the COVID-19 pandemic, the seasonality of tourist cities, and the number of bank branches.