![]() ![]() It has been weaponized by phony social justice warriors.- Elon Musk May 18, 2022Įlon Musk then announced he would be voting Republican. What is not knownĭepositors who rapidy withdrew money from SVB also reportedly relied on private communication channels, such as group text messages, Slack and WhatsApp, as well as phone calls, to share their fears and concerns.Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It highlights poor risk management by SVB in combination with a large fraction of depositors concentrated in the Silicon Valley startup community, who are often very active and highly connected on social media.Īnother team of scholars, led by University of Pennsylvania finance professor Itamar Drechsler, determined that the recent growth of uninsured deposit accounts can destabilize banks.Īs ongoing research by a team of researchers at Columbia University and the University of Chicago suggests, this risk may further be amplified by the rise of fully digital banks and mobile banking apps. What other research is being doneĪ report on SVB’s failure that the Federal Reserve released on April 28 underscored many of the points we made in our paper. This will surely remain an important issue for banks, especially as other financial institutions face issues similar to those that felled SVB. The breadth of the audience and the quick spread of ideas make social media distinct from newspapers and broadcast news since traditional media outlets mostly rely on one-way communication from official sources to the general public. Silicon Valley Bank’s troubles could be the tip of the iceberg for US banks. Back then, word of mouth, media coverage and public signals, such as long lines outside of banks, spread panic among bank customers. US policymakers have acknowledged that social media may have played a role in Silicon Valley Bank’s demise.Įxisting knowledge about bank runs comes mainly from banking distress during the Great Depression. ![]() When we looked at what happened to the stocks of all the banks with vulnerable balance sheets from March 6 to March 13, the one-third of banks with the most tweets experienced declines in their share prices on average about twice as large as the others. ![]() One of them was First Republic Bank, which subsequently failed on May 1. This effect was stronger for the group of banks with the most vulnerability. We found that shares of banks with a lot of Twitter activity in January and February incurred much larger declines in March. To measure vulnerability, we multiplied losses the banks incurred due to the string of interest rate increases that began in March 2022 by the proportion of their deposits that were below the Federal Deposit Insurance Corp’s insurance limit of US$250,000 per account. Together with several other colleagues, we grouped US banks by the number of tweets posted about them and by their vulnerability to a potential bank run. Trades in SVB’s stock were halted on March 10, the day the bank collapsed. That spike in investor tweets coincided with the rapid drop in the bank’s stock price on March 9, which continued in after-hours trading and before the market opened the next morning. That was roughly two and a half hours before tweets mentioning “SVB” or “Silicon Valley Bank,” which were part of a more general-interest discussion, began. The number of tweets mentioning “SIVB,” the bank’s stock ticker, increased sharply on March 9 around 9 am EST. As we explain in our new working paper, “ Social media as a bank run catalyst,” those tweets also destabilized other financial institutions with weak balance sheets. Prior to Silicon Valley Bank’s March 10, 2023, collapse, conversations on Twitter among investors about the bank spiked – helping fuel the SVB bank run. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |