Assessing the Probability of Default Using the Altman Model: Silicon Valley Bank

Abstract

Silicon Valley Bank (SVB) was the 16th largest bank in the US. Established in 1983, its primary customers were the technological sector and life science firms. While SVB was successful over the years, in March 2023, the bank experienced a significant "bank run," which eventually led to its collapse. Using publicly available data from Mergent, this research uses the Altman model to examine three years of financial data from Silicon Valley banks. The results revealed that the bank failed the Altman model test, which is evident that the probability of default was always present but ignored by banking officials and regulators