"US SVB Crisis Bank Run Triggered by Twitter" First Research Paper

A research paper has revealed that the bank run (mass withdrawal event) of the US Silicon Valley Bank (SVB), which went bankrupt last month, was triggered by the social media platform Twitter. This is the first academic paper on the SVB bankruptcy.

Christopher Siller, a professor of business administration at Arizona State University, along with professors from five universities in the US and Europe, stated on the 24th (local time) in their recently published paper titled "Social Media as a Bank Run Catalyst" that "there is evidence that tweets from the startup community worsened the SVB bank run."

SVB, which faced crisis rumors on the 9th of last month, saw a massive outflow of $42 billion (56 trillion KRW) in just one day, ultimately leading to its bankruptcy. The paper analyzed 5.4 million tweets related to listed banks from March 1 to 14, around the time SVB was closed on the 10th of last month, and concluded that social media actually contributed to the SVB bankruptcy.

The US economic magazine Fortune evaluated this as "the first major research finding investigating how Twitter posed a risk to the financial system and acted as a trigger for the SVB bankruptcy."

[Image source=EPA Yonhap News]

The paper reported that before the bank run, depositors spread fear by tweeting about the SVB crisis on Twitter. These depositors are influential members of the Silicon Valley startup community, which constitutes a large portion of SVB’s depositors, including venture capitalists and startup founders. Banks linked to the startup community showed increased bank run risk when depositors were uninsured.

When comparing the stock prices of banks exposed to bank runs with negative tweets about those banks, it was found that the more frequently a company was mentioned, the more "significantly" the risk of a bank run increased. After negative tweets from depositors affiliated with the startup community were posted, a "substantial" negative impact on the bank’s stock price was confirmed within 5 to 15 minutes. The paper stated that observing stock price movements one hour before and after tweets shows "the intensity of Twitter conversations about a bank predicts stock price declines."

In particular, the paper pointed out that other banks are also facing similar risks. The professors who authored the paper noted that "SNS-based bank runs are a new risk," and "considering the increasing ubiquity of social media such as Twitter, these risks will not disappear and may even affect other outcomes." They also suggested that "policymakers need to prepare response measures suited to this new era of rapidly spreading crises."

This study involved Professor Siller as well as Anthony Cookson from the University of Colorado, Corbin Fox from James Madison University, Javier Gil-Bazo from Pompeu Fabra University in Spain, and Juan Felipe Imbert from Paris Dauphine University in France.

This content was produced with the assistance of AI translation services.