Bank Collapse Research Articles

The silicon valley bank collapse, deposit insurance concentration, and stock market returns

The silicon valley bank collapse, deposit insurance concentration, and stock market returns

Break a peg! A study of stablecoin co-instability

Following the increasing adoption of stablecoins, their robustness has become an ongoing concern for investors and regulators alike. This article studies the co-instability of a large panel of stablecoins by identifying their structural breaks and co-occurrences. Moreover, we use Dynamic Time Warping (DTW) and Dynamic Conditional Correlation DCC-GARCH models to assess spillover effects in the wake of four major black swan events in the crypto world. Similar to prior literature, we conclude that algorithmic stablecoins were the major shock receivers of the IRON TITAN and TERRA LUNA crashes, highlighting the importance of allowing for sufficient margins of safety in their design. We also observe that the FTX bankruptcy and the Silicon Valley Bank collapse had repercussions of a different nature and affected more categories of stablecoins, from algorithmic to fiat money-backed. We also highlight how, irrespective of the idiosyncratic or systemic nature of the shocks, well-known custodial stablecoins, as well as the most successful crypto-collateralized tokens, showed resilience during or in the immediate aftermath of these events.

Unveiling the prediction model and mechanism of the collapse of bank slope in the lancangjiang area

This study takes the bank collapse at the left bank of Badi Township of the Lidi Hydropower Station in the Lancang Area as an example. To address the lack of in-depth research on the prediction model and mechanisms of bank collapse, this study conducts field drilling surveys, investigates influencing factors, analyzes causal mechanisms, and proposes prediction methods based on the geological survey data of bank collapse in the reservoir area. The study explores the stratigraphic lithology, determines the key parameters for bank collapse prediction, and studies the failure modes and bank collapse mechanisms. It also proposes the finite element method of bank collapse to predict the width and elevation of bank collapse and provides the influence on the surrounding environment. The results show that the collapsed bank on the left bank of Badi Township is a high and steep soil-like slope, and forms the collapse and retreat type of failure mode after impoundment. The Kachukin method, the bank slope structure method, and the proposed finite element method are used to predict the width and elevation of the collapsed bank. The results indicate that the Kachujin method predicts a larger range of bank collapses and is biased towards safety. In contrast, the prediction ranges of the bank slope structure method and the finite element method are close. The bank collapse position is located in the middle and rear of the residential houses in Badi Township, which is consistent with the on-site investigation and has strong reliability. The predicted width of the bank collapse is about 34 m and the elevation is about 1,845 m. The research results can be directly applied to preventing and controlling bank collapse and have powerful practical application value.

Influence of flood events on the response of steep and coarse-grained channels to base-level lowering in an arid setting

The Dead Sea level has been undergoing a continuous and rapid lowering, presently ∼ 1.1 m/yr, providing a real time laboratory to examine the response of drainage systems to base level drop. There is a gap of knowledge concerning the impact of floods on the fluvial system in an environment of continuous base level lowering. Such knowledge is of pronounced importance due to the world-wide reduction of natural water recourses caused by human and climate impacts. We relate the effects of flash floods on morphological changes in small, steep and coarse-grained alluvial channels as a response to a rapid base level fall. We studied the steep (7–9 %) David and Qedem channels draining to the Dead Sea by (i) monitoring flow events using depth transducers and (ii) topographic changes by repeat drone-based photogrammetric surveys to quantify fluvio-morphological dynamics, and (iii) analyzed boulder-related bedforms and their distance from the thalweg. Altogether 15 monitored flow events of varying magnitude led to a wide range of fluvio-morphological changes. Considerable erosion occurred as expressed by bank collapse and channel bed incision. Small events displayed incision with morphological changes limited to the downstream reach, while larger events caused morphological changes throughout the entire channel. Substantial deposition at the outlet occurred together with local mechanisms of deposition upstream. The extents of erosion and net volumes of change highly correlated with event peak-discharge and event water volume. Frequent thalweg deflections occurred, some of which were related to the interaction with boulders. Boulder ribs displayed processes of formation/destruction in multiple phases, often occurring in larger events. The examined aspects illustrate the unique dynamics of a continuously unstable fluvial system under a flash-flood hydrological regime and its impact on fan delta incision and sediment transport processes.

Recurrence interval of riverbed sand mining hotspots in the Mekong delta: Potential indications of unsustainable replenishment rates

Rampant and illegal river sand mining in the Vietnamese Mekong Delta (VMD) has led to substantial sediment losses and bank erosion. However, regulation of this issue remains a significant challenge due to insufficient monitoring and enforcement efforts, partly attributed to limited data and technology. To support an improved monitoring system in the VMD, this study investigates the spatiotemporal changes in sand mining hotspots and their underlying drivers. The recurrence intervals of sand mining boats were assessed from 2014 to 2020 using Sentinel-1A, and its association with riverbed incisions were examined from bathymetry field surveys between 2017 and 2020. Our results attest to sand mining intensification from 2015 to 2020, particularly in the upstream section of the VMD, where 70% of the activity was recorded. Not only was there an apparent increase in sand mining hotspots by 32.4%, but most hotspots recorded a recurrence interval of 2 years. This potentially indicates a minimal timeframe of sediment replenishment before the same locations become economically viable for further sand extraction. Additionally, a correlation was detected between sand mining hotspots and significant riverbed incisions, although the lack of spatial overlaps in some regions suggests other upstream influences like bank collapse and river damming. Our study, through the meticulous assessment of sand mining boat movement and river bathymetry data, ultimately sheds light on the potentially unsustainable scale of sand mining activities in the VMD. It aims to support informed decision-making and effective regulations that tackle excessive sand extraction amid the dynamic environmental challenges we face, while offering valuable insights to similar deltas worldwide.

Interconnectedness and return spillover among APEC currency exchange rates: A time-frequency analysis

By combining TVP-VAR Model (time domain connectedness) and TVP-VAR based Baruník and Křehlík model (frequency domain connectedness), this study analyzes the impact of the COVID-19 pandemic, the Russia-Ukraine war, and the Silicon Valley Bank (SVB) collapse on the Asia Pacific Economic Cooperation (APEC) forum currency exchange rates. The results reveal that APEC currencies have time-varying effects (tend to cluster in appreciation and depreciation patterns in both the short and long term) and have generated higher total return spillover during COVID-19 (in the time domain) than the Russia-Ukraine war and SVB collapse. During COVID-19 (87.18 %) (total return spillover), impacts were more severe than the Russia-Ukraine crisis (79.49 %) and the Silicon Valley Bank collapse (75.55 %). Moreover, the South Korean won, Thai Bhat and Australian Dollar are identified as consistent shock transmitters, and Malaysian Ringgit, Philippine peso, Indonesian Rupiah, and Chinese Yuan as consistent shock receivers in the time domain. The findings have substantial repercussions for financial regulators and investors.

Crisis and Reflection on the Banking Sector Based on the Collapse of Credit Suisse and Silicon Valley Bank

In March 2023, global financial markets were in the spotlight due to the failure of Credit Suisse and Silicon Valley Bank. This paper provides an analysis of two high-profile events, the takeover of Credit Suisse and the bankruptcy of Silicon Valley Bank. These two banks suffered from financial crises resulting from liquidity crunches and inadequate risk management systems, and the negative effects on their reputations began to spread to the outside world, this triggered widespread volatility in the financial markets and ultimately led to their downfall. Through research and data analysis, this article reveals the reasons behind the collapses of Credit Suisse and Silicon Valley Bank, this article discusses the reasons for the collapse of Credit Suisse and Silicon Valley Bank and discusses their far-reaching impact on the global financial market, especially the investment market. The article proposes feasible solution strategies, offering insights for the financial market and investment industry.

Comprehensive evaluation of urban river ecological bank protection based on AHP-TOPSIS method

ABSTRACT An ecological revetment is a new type that combines natural vegetation with civil engineering technology to establish functions, such as flood control, drainage, ecology, and landscape. Various types of ecological and other bank protection lead to different bank protection effects. Urban river ecological bank protection can effectively prevent bank collapse and promote mutual infiltration between river water and soil and is important for maintaining the balance of the river ecosystem and enhancing the ecological service function of river bank protection. To scientifically and accurately evaluate the ecological protection of riverbanks, this study screened 16 evaluation indicators based on four aspects: structural stability, ecological functionality, landscape suitability, and socio-economic status. A comprehensive evaluation index system for urban river ecological protection was constructed and an urban river ecological protection evaluation model based on the AHP – TOPSIS method was established. The model was used to evaluate the ecological protection of the rivers in the study area. The results revealed that the evaluation value, 0.830, of the self-embedded retaining wall exhibited the best performance among the current slope protection types. In addition, structural stability is a crucial factor in river ecological revetments, and the evaluation results were consistent with the revetment type selected in actual engineering. Therefore, the evaluation system constructed in this study is reasonable and reliable and has strong generalizability. This study provides theoretical guidance for selecting ecological protection banks for future river management projects and has specific references important for academic research and the development of environmental protection banks.

Relationship between Financial Risk Exposure and Non-Performing Loans of Commercial Banks in Kenya

Currently, there is a financial crisis affecting commercial banks in Kenya occasioned by high levels of loan loss provision as a result of Non-Performing Loans. The past decade has seen the collapse of major banks like Chase Bank among others. This trend on Non-Performing Loans of the institutions requires urgent measures to reverse failure to which the entire sector is likely to collapse, and customers would lose a significant amount of their deposits. This study sought to investigate the effect of credit risk and liquidity risk on non-performing loans (NPLs) of commercial banks in Kenya and appraise the moderating effect of firm age on the relationship between financial risk exposure on non-performing loans of commercial banks in Kenya. The study was underpinned by liquidity preference theory. The examination adopted a positivist paradigm guided by explanatory research design. The study targeted 40 commercial banks as the unit of analysis while branch managers, operations and risk managers were the units of observation drawn from the banks adding to 120 respondents and census was used. The study collected both primary data using structured questionnaire on the independent variable and secondary data from publications by Central Bank of Kenya (CBK) and respective banks and the same was analyzed through the statistical package for social sciences (SPSS) version 26 in a descriptive and inferential manner. The study established that credit risk (p<0.05) and liquidity risk (p<0.05) were all found to have significant effect on NPLs of commercial banks in Kenya and significantly moderated by their sizes. It was concluded that financial risk exposure has significant effect on NPLs of commercial banks in Kenya. It was recommended that finance manages working in commercial banks in Kenya to balance the investment in short term and long-term assets to maintain operational liquidity levels for better management of liquidity risks. Credit managers working for commercial banks in Kenya need to review the existing credit risk management efforts and mechanisms to minimize exposure to NPLs.

Bank Retreat Mechanisms Driven by Debris Flow Surges: A Parameterized Model Based on the Results of Physical Experiments

AbstractLateral erosion is a critical factor that influences the formation and amplification of debris flows. However, our understanding of the bank retreat process in debris flow channels is limited, which limits the evaluation of debris flow magnitudes and the prediction of their activity trends. Herein, we conduct physical experiments to investigate bank retreat mechanisms using five types of bank soil and multiple debris flow surges. The bank retreat process is categorized into two stages: toe cutting and bank collapse. Toe cutting is mainly caused by hydraulic erosion, bank collapse includes gravity erosion in the form of toppling failure. Notably, the bank retreat process exhibits a significant negative feedback loop. Bank erosion widens the channel bed, subsequently decreasing the flow depth. In turn, this reduction in flow depth mitigates bank erosion. Moreover, we discover a concise pattern in the complex coupling of hydraulic erosion and toppling failure: erosion efficiency is linearly and negatively correlated with the bed widening width. We develop a new parameterized model for describing the bank retreat process and provided empirical values for the model parameters. Furthermore, we observe that the initial erosion efficiency first increases and then decreases with an increase in the fine particle content of the bank soil. Additionally, we report a negative correlation between the maximum bed widening width and the fine particle content in the bank soil that follows a power function relationship.

Dynamic Analysis of Changes in Jambu Riverbed and Banks: Case Study Around Cikuya Bridge

Several cross-sections of the Jambu River, particularly around the Cikuya Bridge, have experienced bank collapse phenomena. This paper interprets the issues related to bank collapse and its impact on the flow capacity of the Jambu River, especially around the Cikuya Bridge. Morphological changes were simulated using a sediment transport model implemented in the Hydrologic Engineering Center's River Analysis System (HEC-RAS) 6.3.1, integrated with the ARS-USDA Bank Stability and Toe Erosion Model (BSTEM). The simulation results indicate that over a period of 10 years, the thalweg elevation (the lowest point of a riverbed) of the Jambu River around the Cikuya Bridge is predicted to experience deposition in 17 cross-sections and erosion in 15 cross-sections. The highest deposition occurs at the cross-section below the Cikuya Bridge, with a thalweg elevation change of 0.59 m. This warrants attention as the storage capacity of the cross-section decreases by 7% from the initial condition. Predictions indicate that bank collapse will occur in 7 cross-sections over the next 10 years. This is attributed to the steep slopes of silt and clay banks, exceeding 45 degrees, and the reduced safety factor of bank stability due to groundwater pressure influenced by river discharge fluctuations and tidal effects reaching the Jambu River. Bank collapse impacts the elevation change of the riverbed and adds load to the sediment transport model from the collapsing cross-sections to the downstream sections. Keywords: Jambu River, Cikuya Bridge, Cilacap, sediment transport, bank stability and toe erosion model

Banking on trust: exploring the relationship between Federal Reserve directors and financial institutions

PurposeThis study aims to analyze the risk profile of banks whose managers sit on Federal Reserve district bank boards in 2023. In particular, to analyze the impact tha Federal Reserve bank directors have on their own banks.Design/methodology/approachUse a matched sample approach to perform univariate analysis and multiple regression methodology to study whether banks whose managers sit on Federal Reserve Bank boards differ in risk profile from banks whose managers do not sit on Federal Reserve district boards.FindingsThere is limited evidence that banks managed by Fed directors have different capital ratios and leverage ratios relative to non-Fed director banks. There does appear to be a slight difference in the growth of Held-to-Maturity (HTM) Securities between the two samples. Specifically, banks managed by a Fed director saw their HTM portfolio grow over the study period, while banks managed by non-Fed directors reduced their HTM securities. Overall, the results suggest that bank directors on Federal Reserve district boards do so with no apparent detriment to the banks that they manage.Research limitations/implicationsResults of this study suggest that stakeholder director relationships are not associated with higher risk-taking at director banks. This study is unique in that, rather than looking at how director ties might influence the firm that they are on the board of, the focus here is how the firm (the Fed district, in this case) might influence director affiliations. Limitations include a small sample size (70 banks, including the matched sample), and data over a short time horizon. Additional measures of risk can also be analyzed in future research.Practical implicationsWhile there has been much speculation in the industry and in the press regarding the conflict of interest involving bank directors on Fed district boards, this research suggests there is little evidence of any risk differential involving these directors and their specialties to the Fed.Originality/valueThis study involves a unique approach to corporate governance analysis, whereby any conflict of interest that might exist between directors and the firm is studied from an alternate angle – in particular, whether the association with a regulator’s board impacts the director firm’s risk. Furthermore, with the recent events in the banking industry involving the collapse of several banks, including Silicon Valley, the notion that bank management participating on the boards of directors of their own regulator seemed a worthwhile question as to whether this diminished the safety and soundness of the banks that they run.

Study on the Identification, Failure Mode, and Spatial Distribution of Bank Collapses after the Initial Impoundment in the Head Section of Baihetan Reservoir in Jinsha River, China

After the initial impoundment of the Baihetan Reservoir in April 2021, the water level in front of the dam rose about 200 m. The mechanical properties and effects of the bank slopes in the reservoir area changed significantly, resulting in many bank collapses. This study systematically analyzed the bank slope of the head section of the reservoir, spanning 30 km from the dam to Baihetan Bridge, through a comprehensive investigation conducted after the initial impoundment. The analysis utilized UAV flights and ground surveys to interpret the bank slope’s distribution characteristics and failure patterns. A total of 276 bank collapses were recorded, with a geohazard development density of 4.6/km. The slope gradient of 26% of the collapsed banks experienced an increase ranging from 5 to 20° after impoundment, whereas the remaining sites’ inclines remained unchanged. According to the combination of lithology and movement mode, the bank failure mode is divided into six types, which are the surface erosion type, surface collapse type, surface slide type, bedding slip type of clastic rock, toppling type of clastic rock, and cavity corrosion type of carbonate rock. It was found that the collapsed banks in the reservoir area of 85% developed in the reactivation of old landslide deposits, while 15% in the clastic and carbonate rock. This study offers guidance for the next phase of bank collapse regulations and future geohazards prevention strategies in the Baihetan Reservoir area.

Shelter in Uncertainty: Evaluating Gold and Bitcoin as Safe Havens Against G7 Stock Market Indices During Global Crises

This paper investigates the hedging and safe haven capacity of gold and Bitcoin against the G7 stock market indices during the COVID-19 pandemic, the Russia-Ukraine military conflict, and the Silicon Valley Bank collapse. Using a novel Quantile-VAR connectedness approach, the results show that, at the median quantile, both gold and Bitcoin act as effective hedges during normal market conditions and strong safe-haven assets during the three crises. Gold emerges as the most prominent safe haven asset, outperforming Bitcoin, especially during the war and the SVB collapse. Among the G7 stock market indices, the Japanese and the American stocks may be used as risk diversifiers during crises. As for the rest of the G7 stocks, they are regarded as “risk-on” investments. Next, we assessed the robustness of our results at various quantiles. We found them to be generally consistent with the outcomes obtained at the median quantile, with one exception related to the S&P500.The results show that the repercussions of the COVID-19 pandemic and the war are much stronger than the American banking crisis.

Viscous flow and collapse of macroscopic cavities in a granular material

The viscous flow in a granular material containing macroscopic cavities (or clear fluid regions) is determined on the basis of the generalized Darcy equation (outside the cavity region) and the Stokes equation (inside the cavity region). A three-dimensional singularity termed a “Darcylet”, which is a fundamental solution in the granular material, is distributed over the surface of a spherical cavity of unit size that surrounds the isolated singularity. The latter is calibrated with the exact solution and applied to describe the interaction between two cavities, which successfully reproduces previous analytic results. The proposed method is applicable to two cavities until they come into contact, thus providing a theoretical explanation of the fundamental collapse-and-merger process of two cavities. Furthermore, we extend this method to the interaction among multiple cavities, which reveals the effect on the flow field of an arbitrary number of cavities in an arbitrary configuration. To demonstrate the potential of the proposed method, we first apply it to a one-dimensional array of cavities of arbitrary orientation and curvature and estimate the convective diffusion of fluid volume, before considering a two-dimensional slightly disordered array of cavities. The results indicate the development and creation of new fluid passages, which may provide clues for predicting the anomalously fast spread of contaminants in inhomogeneous granular material; the formation of waterways, collapse of river banks, and landslides in civil engineering; and fluidization in chemical engineering. Our results may also provide insights into medical engineering techniques for creating new blood veins for micro-circulation (angiogenesis).

The Failure of the Bank of the Commonwealth: An Early Example of Interest Rate Risk

This Economic Commentary describes the collapse and subsequent bailout of the Detroit-headquartered Bank of the Commonwealth in 1972. Commonwealth failed because it invested heavily in long-duration, fixed-rate municipal securities in the mid-1960s in a bet that interest rates would decline. Instead, with the beginning of the Great Inflation of 1965–1980, rates rose. Liquidity problems then ensued, and the bank approached failure. Unable to find an acquirer because of Michigan’s banking restrictions, regulators instead bailed out the bank because of fears of contagion. This article also compares the collapse of Commonwealth with the spring 2023 failures of Silicon Valley Bank and First Republic. In particular, I discuss structural changes in banking that impacted the speed of the runs and the pools of potential acquirers.

Banker, pastor, teef: Christian financial elites and vernaculars of accountability in Ghana

AbstractWhen nine Ghanaian banks collapsed during the country's 2017–2019 financial crisis, a Charismatic Pentecostal pastor was at the center of public accusations as the board chairman of one of the failed banks. His role put a spotlight on the growing influence of Charismatic Pentecostal institutions and elites in Ghana's financial market. Shifting the perspective between diverse actors who reckoned with the bank's collapse, from ordinary Christians to artist‐activists, this article explores how Ghanaians evaluated the culpability of the pastor and in so doing problematized who Christian elites involved in banking and business are accountable to: God, their congregants, or the public at large? We argue that global financial liberalization has generated new types of financial elites, Pentecostal pastors among them, who become subject to new lines of accountability. Holding someone accountable comes with stakes expressed through vernacular registers that demonstrate how financial markets are engulfed in broader social relations and regimes of ethical evaluation.

Grey preference for analyzing the influence of externality within the graph model for conflict resolution

Externality may have uncertain influence on decision makers (DMs). To address the conflicts with uncertain preference and externality, this study adopts the general grey number to measure the uncertain value of DMs’ option statements influenced by externality. It constructs adjustable grey preference influenced by externality (GPE), which can be dynamically adjusted according to the influence of externality. Subsequently, the study defines four equilibrium solutions for the graph model for conflict resolution based on grey preference influenced by externality (GPE-GMCR). Finally, the method is applied to a commercial bank operating conflict triggered by the Silicon Valley Bank (SVB) collapse in the United States, resulting in optimal results for conflict resolution. Specifically, the new model provides a practical tool for DMs, managers and policy makers to address conflicts arising from DMs’ uncertain preference under the influence of externality in complex environments.

Impact of the collapse of silicon valley bank on the banking sector: An analysis based on nonlinear high-frequency networks

We analyse the impact of the collapse of Silicon Valley Bank (SVB) on the causal structure using a sequence of high-frequency transfer entropy networks. Calculations show that the event significantly affected the causal structure of the banking sector and that companies with high market capitalisation had stronger influence after the event. Finally, path-based indicators suggest that SVB had significant influence before the crisis.

Headline risk: Forging a crisis communication keystone

AbstractIn March 2023, headlines about a single ill‐conceived press release amplified in the social media triggered a one‐day, $42 billion bank run that threatened to destabilise the US financial system. The Silicon Valley Bank collapse represents an extreme example of headline risk, the potential for breaking news to trigger a PR crisis and corresponding brand and business shocks. This paper presents the results of exploratory research supporting the creation of risk management frameworks for measuring, monitoring, managing and ultimately mitigating financially material headline risk. Based on brand tracking data for 24 major companies covered by the news media queried and visualised using an AI‐enabled analytics tool, the study confirms that news corresponds to tail risk—defined in this study as low‐probability, high‐impact events that major companies and national brands would term crises. Time‐series data tracking the volatility of consumer attention and the valence of media buzz support an architecture for constructing rigorous communication research and headline risk management frameworks. Crisis communication emerges as the initial phase in managing exogenous, idiosyncratic shocks marked by significant negative shifts in brand perceptions and consumer purchase consideration.