Abstract
On March 10, 2023, Silicon Valley Bank was closed after a 40 billion dollar deposit outflow and a predicted 100 billion dollar deposit outflow. This paper first describes the causes of this incidence chronologically from the aspects of Macroeconomics policies, flaws in portfolios, and a large proportion of uninsured depositors based on a Fed report. Next, based on previous literature and speeches about bank runs in the United States history, the 2008 crisis in particular, this paper connects the panic in social networks to bank runs. Then, based on past experiments, this paper sets up a model to illustrate how social networks influence depositors decisions. Following this model, this paper subsequently presents a recurred model based on the Diamond-Dybvig model. With the finding in the first two models, the paper shows how herd behavior could lead to bank runs through two models. Last, this paper connects the findings in four models back to the case of the bank run of Silicon Valley Bank.
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