CEO risk-culture, bank stability and the case of the Silicon Valley Bank

Artur Semeyutin, Said Kaawach and Alper Kara

Economics Letters, 2023, vol. 233, issue C

Abstract: We examine the link between CEO risk-culture and bank stability. Using textual analysis, we construct novel bank CEO risk-culture indicators by analysing Earning Calls transcripts (EC) of 160 US Bank Holding Companies (BHC) for the period between 2002 and 2023. We illustrate and discuss our findings using the case of the recently collapsed Silicon Valley Bank (SVB). We observe a weaker emphasis on governance by SVB in comparison to the benchmark sample. We also show an alignment between CEO risk-culture of SVB and other banks’ CEOs with the highest uninsured deposits, including the later collapsed First Republic Bank. Finally, our regression analysis shows that negative metrics of the CEO risk-culture decrease bank stability.

Keywords: Risk culture; Machine learning; Text analysis; Earning calls (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523003981

DOI: 10.1016/j.econlet.2023.111373

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