Analysing Network Dynamics: The Contagion Effects of SVB’s Collapse on the US Tech Industry

Fan Wu (), Anqi Liu, Jing Chen and Yuhua Li
Additional contact information
Fan Wu: School of Mathematics, Cardiff University, Cardiff CF24 4AG, UK
Anqi Liu: School of Mathematics, Cardiff University, Cardiff CF24 4AG, UK
Jing Chen: School of Mathematics, Cardiff University, Cardiff CF24 4AG, UK
Yuhua Li: School of Computer Science and Informatics, Cardiff University, Cardiff CF24 4AG, UK

JRFM, 2024, vol. 17, issue 10, 1-19

Abstract: The collapse of Silicon Valley Bank in 2023 was historically significant, and based on past experiences with similar banking sector shocks, it is widely expected to trigger domino effects among tech giants and startups. However, based on the analysis of risk spillover networks established by VARs estimation, we find little evidence of such a spread of risk contagion. We observe a clear downward trend in the total connectedness index of large-cap tech companies right after the the SVB collapse. Moreover, the market quickly responded in a way that isolated the financial services subcategory within the tech sector, forming a distinct community in the network. This explains how the risk contagion paths were cut off. We also provide visualised comparisons of contagion paths within the tech network before and after the SVB’s collapse.

Keywords: LASSO VAR; network analysis; financial contagion; shock spillover; bankruptcy (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/17/10/427/pdf (application/pdf)
https://www.mdpi.com/1911-8074/17/10/427/ (text/html)

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:gam:jjrfmx:v:17:y:2024:i:10:p:427-:d:1484315

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().