Lots of talk now about whether the Silicon Valley Bank run (#SVBCollapse) that brought the bank down will become a bank panic. A couple of thoughts on that here. 1/
First, both this collapse and some of talk about other regional banks is related to communities with low cohesion. We know the story about Silicon Valley -- rule number one is looking out for yourself. Some research here: pubsonline.informs.org/doi/full/10.12… 2/
Second, if bank runs turn into bank panics with runs on multiple banks, community similarities will shape the spread. Tech communities elsewhere need to watch out. Research here: journals.sagepub.com/doi/pdf/10.117… 3/
Third, banks can help each other prevent runs or deal with runs. That has not happened for a long time because they now rely on regulation and deposit insurance. This is what it used to look like: pubsonline.informs.org/doi/full/10.12… 4/
That's it. Let's hope the regulators make the right moves now because this could get expensive otherwise, both on the bank side and on the tech and startup side.
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