Who Loses Most When Big Banks Suddenly Fail? Evidence from Silicon Valley Bank Collapse

Xia Liu, William Megginson, Nhu Tran and Siqi Wei

Finance Research Letters, 2024, vol. 59, issue C

Abstract: We analyze the market reaction of 137 Silicon Valley Bank (SVB) depositors and 251 SVB borrowers to the bank's collapse. Depositor shares experience a -5.12% abnormal return (AR) on the event date (March 10, 2023), and a -12.38% cumulative abnormal return (CAR) over a 30-day post-event window. More surprisingly, the borrowers also experience a similar event-day AR (-4.16%) and an even worse 30-day post-event CAR (-13.47%). SVB clients have worse CARs if they are smaller, with higher cash holdings, or with lower market-to-book ratios. These results indicate that borrowers appear to suffer more than depositors from SVB's failure.

Keywords: Silicon Valley Bank; Event Study; Commercial Banking (search for similar items in EconPapers)
JEL-codes: G21 G30 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323011789
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011789

DOI: 10.1016/j.frl.2023.104806

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().