Bank Collapse Research Articles

The Reason for Silicon Valley Bank Collapse and Relevant Suggestion

Against this background, the primary objective of this study is to analyse the variables and underlying causes that contribute to the potential collapse of Silicon Valley Bank (SVB). Based on extensive research and analysis, the internal structure of SVB reveals that several key causes have contributed to the company's bankruptcy. These elements include the adverse economic conditions, the impact of the pandemic, government policies, and internal management issues inside SVB. The findings of the research underscore the impact of the prevailing economic downturn and the decision of the United States government to raise interest rates on SVB, a financial institution with a singular portfolio. Consequently, SVB is compelled to address the dearth of capital by consistently liquidating its assets. The failure of SVB Bank can be attributed to its tight association with the financial market and the overall state of the economy. The potential collapse of a financial institution might exert adverse effects on the overall stability of the financial market. Hence, it is contended that organisations should pursue portfolio diversification, enhance their liquidity management, and safeguard their cash-based assets in order to mitigate risk diversification.

Road Ahead: Post Collapse of Punjab and Maharashtra Cooperative Bank

This case is about challenges faced by the depositors and the entire banking system following the collapse of the Punjab and Maharashtra Cooperative Bank. The Deposit Insurance and Credit Guarantee Corporation insured the bank deposits, and the earlier deposit insurance coverage was $74 million, which was increased to $370 million in the Union Budget of 2020. This increase was attributed to the collapse of the Punjab and Maharashtra Cooperative Bank, where 0.3 million people lost their money.

Geographies of Pawnbroking in pre-Famine Ireland

While pawnbroking had a long history in Ireland it was not until the second decade of the nineteenth century that pawnshop numbers increased dramatically and the geography of pawnbroking shifted radically. This paper provides a detailed account of this changing geography. It outlines where the money that funded the expansion of pawnbroking originated. Unlike other businesses, pawnbrokers paid significant bonds to enter the trade and were legally required to provide three substantial independent sureties. To quickly recoup these initial costs and become profitable, pawnshops opened only in settlements where a significant demand for short-term credit existed. The ongoing decline of Ireland’s textile industries, the post-Napoleonic price collapses for agricultural commodities after 1815, the collapse of private banks in 1820 and a significant potato famine in the summer of 1822 combined as catalysts that caused a rapid expansion of pawnbroking between 1817 and 1824. As living standards deteriorated, pawnbrokers migrated into new settlements exploiting new poverties and the growing need for credit. This paper tracks the diffusion of pawnshops between 1787 and 1824 to provide new understandings of the geographies of deteriorating living standards, impoverishment and increased levels of economic precarity in the immediate post-Napoleonic period.

Risk Assessment of the Banking Industry under COVID-19

The outbreak of the COVID-19 pandemic in 2020 has brought various risks and threats to the entire banking industry, from which we can also know the importance of bank risk management. This paper mainly describes, analyzes, and summarizes the five aspects of liquidity risk, credit risk, market risk, and systemic risk. With regard to liquidity risk, the article describes the impact of the Federal Reserves continuous interest rate hikes on the banking industry in order to curb the high inflation caused by the COVID-19 pandemic and takes the collapse of Silicon Valley Bank as an example for analysis. Regarding credit risk, this article takes Credit Suisse Bank as an example. Highly leveraged speculative transactions caused huge losses to the company due to the high default rate during the epidemic. For the analysis of market risk, the article synthesizes the deeds of Credit Suisse Bank and Silicon Valley Bank, focuses on the interest rate, and the reasons for the collapse of Credit Suisse and Silicon Valley Bank are different on the surface, but the underlying logic of the two events is traced to the same There is a close relationship between the current interest rate environment and the changes in interest rates in recent years. As for systemic risk, the article mainly writes about the purpose and effect of Basel III and the supervision of the capital adequacy ratio during the epidemic. Overall, commercial banks need to closely monitor these risks and take steps to mitigate them to ensure their stability and continued operations during the pandemic.

Analysing the influence of accounting conventions on the financial performance of commercial banks in Kenya

The collapse of some commercial banks in Kenya in the recent past has raised the question of the credibility of financial information as a tool for investors to make informed decisions. The study sought to analyse the disclosure practices of accounting conventions on the financial performance of commercial banks in Kenya. The following specific objectives guided the study: to establish the influence of the disclosure, consistency, prudence and materiality of financial reports on the performance of commercial banks in Kenya. A cross-sectional survey was adopted. The target population was 42 respondents who formed the sample size by the census method. The data was collected through questionnaires, secondary data and annual reports and analysed quantitatively and qualitatively. Quantitative data was analysed using descriptive statistics and inferential statistics. The finding shows a moderate positive relationship between disclosure and the performance of commercial banks. The relationship is significant (r = 0.322, p>0.01). The result shows a moderate positive relationship between consistency and performance of commercial banks. The relationship is significant (r = 0.369, p>0.01). The results also show a moderate positive relationship between prudence and the performance of commercial banks at a significance of (r=0.500, p>0.01). On establishing the relationship between materiality and performance of commercial banks, it was found there is a moderate positive relationship with a significance of (r = 0.317, p>0.01). Respondents indicated that the consistency of financial reports has little effect on the net profit of commercial banks. Respondents indicated that prudence of financial reports leads to better organisational performance. The materiality of financial reports affects organisation performance. Prudence in financial reporting affected the decision-making among the investors in the banking industry. The study recommends that commercial banks' management ensure transparency, honesty, consistency and reliability during financial reporting.

Who Loses Most When Big Banks Suddenly Fail? Evidence from Silicon Valley Bank Collapse

We analyze the market reaction of 137 Silicon Valley Bank (SVB) depositors and 251 SVB borrowers to the bank's collapse. Depositor shares experience a -5.12% abnormal return (AR) on the event date (March 10, 2023), and a -12.38% cumulative abnormal return (CAR) over a 30-day post-event window. More surprisingly, the borrowers also experience a similar event-day AR (-4.16%) and an even worse 30-day post-event CAR (-13.47%). SVB clients have worse CARs if they are smaller, with higher cash holdings, or with lower market-to-book ratios. These results indicate that borrowers appear to suffer more than depositors from SVB's failure.

Strategi Peningkatan Pembiayaan Multi Guna (PMG) Pada PT. Bank Sumut Unit Usaha Syariah

Improper financing management will cause many problems and will even cause the collapse of Islamic banks. In financing carried out by Islamic banking, there are bound to be many obstacles experienced, such as default constraints, problematic financing or other constraints, especially during the Covid 19 pandemic. To minimize the various obstacles faced earlier, of course, Islamic banking is required to have an accurate strategy to win market competition while minimizing the occurrence of problem financing. This study aims to analyze the strategy of PT. Bank Sumut Sharia Business Unit in increasing Multipurpose Financing (PMG). This research is a type of qualitative research. Obtained research results SWOT analysis results show that the company's position is in quadrant 1, namely supporting an aggressive strategy. This quadrant position is a very favorable situation, where the company has opportunities and strengths so that it can take advantage of existing opportunities. The strategy that must be applied in this condition is the SO (Strength - Opportunity) Strategy, which is a strategy that utilizes the company's internal strengths to take advantage of external opportunities. The S-O strategy is developed by combining strengths in the internal evaluation matrix and opportunity factors in the external evaluation matrix.

Deformation Characteristics and Stability Prediction of Mala Landslide at Miaowei Hydropower Station under Hydrodynamic Action

In recent years, with the completion of the construction of large-scale hydropower projects in China, a series of engineering geological problems that occurred during the operation of the hydropower station have become an important issue affecting the normal operation of hydropower stations. Landslides on reservoir slopes triggered especially by water storage and other factors related to the construction of hydropower stations seriously affect the normal operation of the hydropower station and lead to other geological disasters. Research indicates that many reservoir-area landslides are triggered by hydrodynamic forces resulting from water level fluctuations in hydroelectric power stations. The Mala landslide of Miaowei Hydropower Station in the Lancang River Basin of China is taken as the engineering example to study the influence of hydrodynamic forces on the deformation characteristics and stability trends of the landslide. This paper explores the formation mechanism and influencing factors of the Mala landslide by conducting a field investigation of the Mala landslide and analyzing the monitoring data. Additionally, this paper also discusses the impacts of water storage, rainfall, and engineering construction on landslide induction. It is considered that the evolution of the Mala landslide from the initial stage of water storage to the current state mainly includes four stages: small-scale bank collapse stage, creep deformation stage, accelerated sliding stage, and uniform sliding stage. Moreover, the changes in the trend of landslide stability are analyzed using the two-dimensional finite element method. The research results provide a valuable reference for understanding the formation mechanism and predicting the deformation of reservoir landslides, which has considerable engineering practical significance.

Subprime Credit Crisis: Cause, Consequence & Response

The 2008 financial crisis had significant impacts on the global economy, leading to the collapse of several large financial institutions, massive government bailouts, and a global recession that lasted for several years. This paper discusses the causes and consequences of the crisis, highlighting the importance of understanding the mechanisms that underlie financial crises and the role that banks and financial institutions play in them. The recent Nobel Prize in Economics, given to the research of systematic risk and the role of banks in financial crises, is also covered in this essay. The crisis was brought on by a number of causes, including loose monetary policy, a housing bubble, and the growing use of sophisticated financial derivatives. The collapse of the subprime mortgage market, the high level of unemployment, and the collapse of many large companies and banks were among the consequences of the crisis. The paper underscores the importance of continued research into the causes and mechanisms of financial crises.

Risk Management in the Banking Sector During the COVID-19 Crisis: Challenges & Responses

The COVID-19 pandemic has significantly impacted the banking sector worldwide, exposing vulnerabilities and leading to the collapse of major banks, such as Silicon Valley Bank, Signature Bank, First Republic Bank, and Credit Suisse. Concerns about a potential systemic banking crisis have been sparked by the circumstance, which also emphasizes the necessity for risk management techniques to change with the times in order to handle key risks in the banking industry, such as credit, liquidity, market, and systemic risks. This study intends to look into how the COVID-19 epidemic affected risks in the banking industry and how banks responded. According to the findings, the pandemic has increased market, credit, and liquidity risk as well as systemic risk due to the interconnection of financial markets and institutions. To address these risks, banks have adopted various measures, such as increasing capital buffers, adjusting lending policies, and enhancing risk management systems. However, the study suggests that risk management tools need to evolve further, and banks need to develop proactive strategies to identify and mitigate potential risks before they become systemic. Banks can increase their resilience to upcoming crises and help to general financial stability by comprehending how the pandemic will affect various risks and implementing proactive risk management techniques.

Inspiration and Lessons Learned from the Silicon Valley Bank Collapse

The article examines the reasons for the collapse of the Silicon Valley Bank by analyzing a number of articles from the same period. In discussing the causes of failure the article focuses on the allocation of its own resources and the types of bank customers. Through a combination of internal and external discussions, some recommendations on asset allocation and customer selection can be given to future banks in similar situations. This article argues that it is essential for the bank's top management to use foresight and keen analysis when making decisions. In terms of customer base, a diversified customer base can hedge many risks. This is one of the innovative aspects of this paper, preventing problems caused by external factors by changing internal factors. In addition to this, banking institutions need to have a study of investments, and an analysis of national policies is also essential, especially in these particular circumstances.

Enhanced safe-haven status of Bitcoin: Evidence from the Silicon Valley Bank collapse

This paper sets out to assess the safe-haven property of Bitcoin by employing a complete ensemble empirical mode decomposition with adaptive noise (CEEMDAN)-based event analysis approach amid the collapse of Silicon Valley Bank. Results reveal Bitcoin's role as a safe-haven amidst the uncertainty permeating the US banking market. In comparison to gold, stock, bond, and foreign exchange market indices, Bitcoin exhibits superior short-term performance and outperforms gold in terms of return and volatility stability in the medium term. Notably, the observation that Bitcoin sustained its safe-haven attribute over a span of 50 days even during periods of relatively diminished market uncertainty further solidifies its status as an improved safe-haven asset.

Study on the influencing factors and evolution of loess bank collapse with physical modelling

BackgroundReservoir bank collapse in loess areas may lead to the siltation of reservoir and bank retreat. Therefore, the study of reservoir bank collapse has practical significance. Almost of the bank collapse width prediction method were based on the classical graphical method which do not consider the process of bank collapse. But practice shows that this method can overestimate the width of bank collapse. Meanwhile, there are few studies specifically focused on the collapse of loess bank slopes.MethodsTo improve the prediction method of loss bank collapse width, the influence of water depth, dry density and bank slope angle on loess bank collapse was studied by physical modelling. The bank collapse width and the morphology of the bank slope were recorded during the experiment.ResultsThe bank collapse width increases with the increase of water depth, increases with the increase of slope angle, and decreases with the increase of dry density. The modeling process shows that the loess bank collapse occurs firstly underwater, the erosion niche will be formed underwater, and then the above water slope is damaged. This process is repeated until the underwater accumulation slope reaches the stable state, and then bank collapse stops. After the bank collapse, the above water slope is polyline, while the underwater slope is curved. When the slope angle is less than 27°, the bank collapse will not occur, and when the slope angle is between 27° and 40°, the bank collapse type is abrasion type. When the slope angle is greater than 40°, the bank collapse type is dumping type or shear type. Based on this, the improved balanced alluvial accumulation approach was proposed, which considers the mechanical equilibrium of above water bank slope and the morphology of underwater slope. The new method can reflect the stage characteristics of loess bank collapse, which is more reasonable than the empirical graphical method.ConclusionsThe experimental results indicate that when predicting the width of loess bank collapse, it is necessary to combine the bank collapse width and process of bank collapse. The relevant conclusions have a certain role in exploring the mechanism of loess bank collapse and bank collapse prediction methods.

When giants fall: Tracing the ripple effects of Silicon Valley Bank (SVB) collapse on global financial markets

Using an event study approach, we examine how the forex, metal, energy, and cryptocurrency markets responded to the SVB collapse. We observe that the forex and metal markets respond positively on event and post-event days. In contrast, the cryptocurrency market reacts negatively but generates positive abnormal returns, indicating that investors may seek refuge in these purported safe-havens. However, the energy market responded adversely to the event, and the trend continued in the aftermath. The study advocates the need for monitoring and minimizing financial contagion risk due to the increased interconnectedness of the financial markets. Our findings highlight the perilous consequences of the SVB collapse, as it triggered contagious effects that may spread throughout the global financial markets. Therefore, investors and financial institutions must diversify their portfolios across various asset classes, which can help mitigate the risks of such events.

The cascade effect: Are the U.S. economy and global stock markets vulnerable to the collapse of First Republic Bank?

Following the collapse of Silicon Valley Bank and Signature Bank, First Republic Bank collapsed and is considered the second-largest bank failure in U.S. history. These bank runs can have a cascading or contagion effect on other large banks, and U.S. banking crises can flare up again. We examine the effect of the First Republic bank run on top U.S. banks, U.S. stock indices, and global stock indices using standard event study methodology. We report abnormal returns and cumulative abnormal returns for the event day (t = May 01, 2023) and the 10-day event window (t-5 to t+5), respectively, using data from the 120-day estimation window. The results indicate that on the event day, only JP Morgan Bank's returns were negative, while other banks acted as safe havens for investors. No significant change in returns on the event day is observed for U.S. sector indices (except for the healthcare sector) and global stock exchanges, except for the European and Chinese markets. During the event window, the occurrence of the event significantly affects bank returns after the event date, but no significant effect is found before the event date. Similarly, the healthcare and transportation sectors are more affected than other sectors, while the U.S. and Canadian stock markets seem to be more susceptible to the bank run. Overall, the results suggest that the U.S. government should take decisive initiatives to stop the ripple effect and protect the entire financial system.

Silicon Valley Bank bankruptcy and Stablecoins stability

To what extent does the collapse of a commercial bank spread contagion across cryptocurrency markets? How do markets behave around bankruptcy if digital assets remain stuck within the bank and cannot be withdrawn? We use a BEKK model to examine contagion effects across major digital assets during the Silicon Valley Bank (SVB) collapse period in early March 2023. We find evidence of contagion across major stablecoins and Bitcoin. We also examine the price action when nearly all withdrawals at SVB were prohibited. We find substantial abnormal movements in stablecoin cumulative returns and traded volumes, indicating a “flight to safety” from less to more authoritative and trusted stablecoins. The implications for practitioners and policymakers are discussed.

Effects of Institutional Governance on Financial Performance of Commercial Banks in Kenya

Although the banking industry is a very important vehicle for spurring economic development and especially in least developed economies, the Kenyan commercial banks are facing financial performance constraints, leading to collapse and liquidation of numerous commercial banks. Accordingly, borrowers, depositors and shareholders are suffering enormous financial losses; which have dramatic implications for the economy of the country. The crisis in this very crucial industry has associated with poor institutional governance. Although various studies have been undertaken on institutional governance and financial performance, majority of the studies have yielded inconsistent result while others have contextual, conceptual and methodological gaps. So, this study analysed the effect of institutional governance on financial performance of Kenyan commercial banks. It adopted descriptive and diagnostic research designs to outline the characteristics of existing phenomenon. The target population was the 43 commercial banks licensed and operating in Kenya. Since the sample size was easily accessible and manageable the study used census. Data was collected using primary sources using a questionnaire, Data was analysed using quantitative analysis approach to produce descriptive statistics and thereafter multiple regressions to estimate a model. The study found that at 5% significance, level board size, ownership concentration, audit structure and, board composition, positively and significantly affects financial performance of licensed Kenyan Commercial Banks. The study recommends that Kenyan Commercial Banks should review their board size policies, largely focus on having audit committee, and strengthen their board composition guidelines to ensure board diversity comprises.

Determinants of Non-Performing Loans in a Small Island Economy of Fiji: Accounting for COVID-19, Bank-Type, and Globalisation

An increase in non-performing loans and bad debts in the banking sector can make banks vulnerable to a loss of confidence among customers and other banks and a banking collapse. The recent pandemic (COVID-19) and the evolving globalisation can affect bank operations, although the effects may depend on the type of banks and other bank-specific factors. In this paper, we revisit the topic on the determinants of non-performing loans of banks in a small island economy of Fiji over the period 2000 to 2022. We apply a fixed-effect method and consider seven banks (five commercial banks and two non-bank financial institutions). In our estimations, we examine the effect of bank-specific factors and control for the social and economic globalisation, the GFC, the COVID-19 pandemic, and bank-type effects, as well as the effect of the interaction between the bank type and the pandemic, as key contributions of the study. Overall, our results are consistent in terms of the effects noted from the bank-specific factors. From the extended model estimations, we note that COVID-19 had a more adverse effect on loan losses than the GFC, and the interaction between the bank type and COVID-19 indicates that non-banks were highly vulnerable to loan losses, whereas commercial banks exhibited greater preparedness. Economic globalisation reduces bank losses, whereas social globalisation exacerbates NPLs.

Recent intensification of riverbed mining in the Mekong Delta revealed by extensive bathymetric surveying

Large-scale sand extraction has had significant and compounding impacts on the riverine environment of the Vietnamese Mekong Delta (VMD). Yet, effective and targeted implementation of regulations and sustainable management remains hindered by scant data availability, limiting a comprehensive understanding of the delta's sand mining scale and extent. This study assessed recent intensifying patterns of sand mining activities in the VMD mainly based on extensive bathymetric surveys carried out across 800 km2 of the VMD river channel from 2017 to 2022. Our results revealed severe riverbed deepening across the VMD, with the upper reaches of the Hau (Bassac) River experiencing an average incision of 1.4 m from 2017 to 2022, resulting in sediment losses of 127 Mm3. Similarly, the upper reaches of the Tien (Mekong) River and the Co Chien branch showed incisions of 1.3 m and 0.7 m from 2017 to 2020, accompanied by sediment losses of 139 Mm3 and 87 Mm3, respectively. The observed spatial and temporal variability in incisions, along with widespread sand mining pockmarks along the riverbed profiles, provide strong evidence of the significant contribution of sand mining to changes in riverbed morphology. The progressive lowering of riverbed elevation provides further evidence of the recent intensification of sand mining activities. Additionally, field surveys highlighted the proximity of perceived sites of bank collapse to pitted riverbeds, providing reliable indications of sand mining-induced erosion. Ultimately, we intend for this evidence-based assessment of sand mining activities in the VMD to contribute to informed quantitative assessments of sediment budgets and effective implementation of regulatory frameworks for sustainable sand mining in the future.

Entrepreneurship in Latin America: Perspectives for a new world order

Entrepreneurship in Latin America: Perspectives for a new world order