Social media raises bank run risk, fueled Silicon Valley Bank’s collapse, paper says
Publishing timestamp: 2023-04-24 10:45:55
Summary
A working paper co-authored by university professors has warned that social media amplifies bank run risk, following the sudden end of Silicon Valley Bank in March. The paper argues that communication and coordination pose a risk to banks, particularly when many of the deposits in the bank are uninsured. The authors examined original tweets that included the financial institution's cashtag between January 2020 and March 2023, and found that the intensity of Twitter conversation about the bank predicted stock market losses at an hourly frequency. The paper concludes that open communication by depositors via social media increases bank run risk for other banks that were exposed to such discussions in social media.
Sentiment: NEGATIVE
Tickers: SIVB,
Keywords: banks, business news, markets, svb financial group, investment strategy,