Hot topic: Nora Pankratz wins FIR-PRI grant to study financial impact of heat exposure

Finance with a difference

Looking closely at the connection between economics and the wider world, and the associated issues of sustainability, is a longstanding interest for Pankratz. After an undergraduate degree at Mannheim University, she came to SBE for the Master’s in International Business’ sustainable finance track – and stayed. 

Of the move to Maastricht, she recalls, “I knew after my undergraduate degree that I wanted to keep studying finance, but I wanted to do something that went beyond a classical finance master’s, calculating MPVs and seeing what is most profitable. I thought that the sustainable finance perspective was one that was really needed, and also gave the degree a broader horizon. After I had already applied for many programmes, I saw this one at the last minute and said – yes, that’s the one.” Now in her third year as a PhD candidate, she is quick to emphasise just how valuable the support and encouragement she receives from Bauer and Derwall has been.

Shocking conclusions

What will her research aim to tell us, and how will she find the answers?

“Essentially we want to look at how firms react to shocks in heat exposure. We know that extreme heat can be quite detrimental for individuals, and that economically, looking at GDP, growth or units of output, we see the losses at national level when there are shocks in heat exposure. But the only thing that has not been studied yet is at the firm level, and how companies react to shocks in heat exposure. This is important to know, given that it will be getting warmer – and that heat shocks will become more frequent. In the Netherlands there used to be a heatwave every three years, but now it’s every second year.”

Pankratz continues: “Beyond some really small studies, no one has looked at this issue in general. So we are trying to set up a study on the baseline, to see how it works in aggregate, and to see who reacts more strongly and less strongly. Of course in agriculture, you will expect that the effect will be really pronounced, because crops’ performance is related to temperature, but there are impacts elsewhere as well.

“What I’m doing at the moment is technically a little bit tricky. We draw on 10,000 weather stations from Nasa for the temperature data, and we link this large data set to firms in the US and Europe, many of whom have subsidiaries all over the world, and study the effect on their financial performance. At the moment I am awaiting the results for the full data set.”

New field, big ideas

Is this the kind of research made possible by the increased amounts of data available to researchers – a big data project, in other words?

Pankratz laughs. “Hmmm… let’s say it’s an almost-big data project. Medium data, perhaps.”

Returning to the FIR-PRI honour, she says, “I started off from scratch on this project, and when you work out something by yourself you are always a little bit insecure about whether it’s a good idea. [As a PhD student] doing this for the first time, it’s amazing to have won this award, and even better that it means someone has said, ‘Yes, this is a really good idea’ – and to see such interest in the topic. It’s nice to be in a field that feels new, and is so topical at the moment.”