Banking Crisis: An Insight from the Collapses of SVB and Credit Suisse

Abstract

The financial industry has long been a source of fluctuation and instability, and the recent events have further complicated post-COVID economic performances. This paper generalizes the theory of bank failures, the banking crisis, and the following economic consequences from past literature. It then analyses recent bank collapses and government responses, paying particular attention to Silicon Valley Bank and Credit Suisse. Finally, the conclusion draws on the validity of the theories in terms of being applied to the post-COVID banking system, yet current prudential policies and rescue plans need to be reviewed and upgraded.