The Phantom of 2008 Financial Crisis

In March 2023, two banks in the US, Silicon Valley Bank and Signature Bank, failed. Silicon Valley Bank provided banking services to nearly half of the country's venture capital-backed technology companies [1]. The failure of these banks was one of the three biggest in US banking history, following the collapse of Washington Mutual in 2008 [2]. Signature Bank had nominal assets of $118 billion at the time of its failure [3]. The failures have rocked the banking industry and raised concerns about the stability of the banking system [4]. A customer was seen standing outside a shuttered Silicon Valley Bank headquarters on March 10th after regulators closed the bank due to insufficient cash to pay depositors [5]. It is important to note that bank failures are not uncommon during times of economic stress and that there have been several major economic crises throughout history that have led to bank failures.

The collapse of Silicon Valley Bank and Signature Bank in March 2023 has raised concerns about the stability of the banking system, but it differs from the financial crisis of 2008 [6][7]. While Silicon Valley Bank's collapse was the second-biggest in US history in terms of bank failures since 2001 [8], it was more of a true bank run where a lot of depositors wanted their money all at once. According to Ted Rossman, senior industry analyst at Bankrate.com, there is a big difference between the collapse of Silicon Valley Bank and Signature Bank and the financial crisis of 2008 [6]. Since 2001, more than 500 banks have failed, but the vast majority were in the wake of the Great Recession [9]. Therefore, while there may be some similarities between these events, they are not identical.

The 2023 Global Recession has further exacerbated concerns about the stability of the banking system, as evidenced by the failures of US banks like Silicon Valley Bank and Signature Bank, reflecting the economic challenges and disruptions in the supply chain.


References

[1] Giang, V. (2023, March 10). Banking turmoil: What we know. The New York Times. Retrieved March 20, 2023, from https://www.nytimes.com/article/svb-silicon-valley-bank-explainer.html 

[2] Tennekoon, V. S. (2023, March 14). Analysis: Why silicon valley bank and signature bank failed so fast. PBS. Retrieved March 20, 2023, from https://www.pbs.org/newshour/economy/why-silicon-valley-bank-and-signature-bank-failed-so-fast 

[3] Buchwald, E., Chambers, F., Schulz, B., & Lee, M. (2023, March 15). Silicon Valley Bank, Signature Bank collapses explained, live updates on new developments. USA Today. Retrieved March 20, 2023, from https://eu.usatoday.com/story/money/economy/2023/03/13/silicon-valley-bank-collapse-live-updates/11464387002/ 

[4] Bennett, R. (n.d.). Latest banking crisis news: Failures of silicon valley bank and signature bank. Bankrate. Retrieved March 20, 2023, from https://www.bankrate.com/banking/bank-failures-latest-updates-silicon-valley-signature-bank/ 

[5]  Dore, K. (2023, March 13). What signature bank, Silicon Valley bank failures mean for consumers and investors. CNBC. Retrieved March 20, 2023, from https://www.cnbc.com/2023/03/13/how-the-signature-bank-silicon-valley-bank-failures-may-affect-you.html 

[6] Quinlan, C. (2023, March 14). Silicon Valley Bank's collapse differs from our last financial crisis. New Jersey Monitor. Retrieved March 20, 2023, from https://newjerseymonitor.com/2023/03/14/silicon-valley-banks-collapse-differs-from-our-last-financial-crisis/ 

[7] Miettinen, D. (2023, March 17). The banking crisis: What you actually need to know. Marketplace. Retrieved March 20, 2023, from https://www.marketplace.org/2023/03/17/the-banking-crisis-what-you-actually-need-to-know/ 

[8] Russell, K., & Zhang, C. (2023, March 11). The second-biggest bank failure. The New York Times. Retrieved March 20, 2023, from https://www.nytimes.com/interactive/2023/03/10/business/bank-failures-silicon-valley-collapse.html

[9] Melgar, L., & Shaban, H. (2023, March 14). How the latest bank failures size up against the nation's biggest banks. The Washington Post. Retrieved March 20, 2023, from https://www.washingtonpost.com/business/2023/03/13/bank-failure-size-svb-signature/ 

I completed an Integrated Master of Science in Agricultural Economics from the Agricultural University of Athens and have studied at premier global universities. I hold a Specialization in Quantitative Finance from the National Research University of Moscow, and a Python 3 Programming Specialization from the University of Michigan. My academic interests encompass Economics, Econometrics, Mathematical Economics, Monetary Economics, Financial Economics, Public Economics, Economic Development, and I research financial crises.

Post a Comment