Download pdf
The Trigger and Application of Black Swan Events: A Case Study of Silicon Valley Bank Failures
- 1 Metropolitan College, Boston University, 1010 Commonwealth Ave, Boston, United States
* Author to whom correspondence should be addressed.
Abstract
On March 10, 2023, Federal regulators shut down Silicon Valley Bank, the 16th-largest bank in the country. As a result of the significant run, the bank was forced to file for bankruptcy. The purpose of this paper is to analyze the borrowing and triggering factors of black swan events by taking the Silicon Valley Bank bankruptcy event as an example, and to discuss the revelations and reflections of black swan events from the perspective of risk management based on the definition and characteristics of black swan events. Black swan events are those rare, unpredictable events with great impact, while bank bankruptcy events imply significant changes in the stability of the financial system. The failure of Silicon Valley Bank exposed the vulnerability of the banking sector and raised depositors' concerns about bank withdrawals and the cash flow crisis of global technology companies. Thus, the failure of Silicon Valley Bank has important lessons for future bank management and regulation. This paper argues that for most people, the failure of Silicon Valley Bank was not a black swan event, but even for many professionals, the impact of bank failures is unpredictable.
Keywords
black swan events, Silicon Valley banks, bank failures, risk management
[1]. Taleb, N.N. (2007) The Black Swan: The Impact of the Highly Improbable. New York: Random House, New York, pp. xvii–xviii.
[2]. Runde, J. (2009) Dissecting the Black Swan. Critical Review, 21:4, 491-505.
[3]. Faulkner, P., Feduzi, A. and Runde, J. (2017) Unknowns, Black Swans and the risk/uncertainty distinction. Cambridge Journal of Economics, 41, 1279–1302.
[4]. Lindaas, O.A., Pettersen, K.A. (2016) Risk analysis and black swans: Two strategies for de-blackening. Journal of Risk Research, 19(10), 1231-1245.
[5]. White, L.J. (2023) The Other March Madness: The Debacle of Silicon Valley Bank and Its Important Lessons. Available at SSRN: https://ssrn.com/abstract=4447655
[6]. SVB Financial Group. (2023) Form 10-K. Retrieved from https://www.sec.gov/Archives/edgar/data/719739/000071973923000021/sivb-20221231.htm#ibb4dd73a1d3f4bff944b5d35fd2c5e2a_184
[7]. Board of Governors of the Federal Reserve System. (2023) Re: Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank. Retrieved from https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf
[8]. ecision-making. Organizational Behavior and Human Decision Processes, 124, 268-283.
[9]. Federal Deposit Insurance Corporation. (2023) Bank Failures in Brief——Summary 2001 through 2023. Retrieved from https://www.fdic.gov/bank/historical/bank/
[10]. Federal Deposit Insurance Corporation. (2023) Remarks by FDIC Chairman Martin Gruenberg on the Fourth Quarter 2022 Quarterly Banking Profile. Retrieved from https://www.fdic.gov/news/speeches/2023/spfeb2823.html
[11]. Vo, L.V., Le, H.T.T. (2023) From Hero to Zero——The Case of Silicon Valley Bank. Available at SSRN: https://ssrn.com/abstra=4394553 or http://dx.doi.org/10.2139/ssrn.4394553
Cite this article
Qi,Y. (2023). The Trigger and Application of Black Swan Events: A Case Study of Silicon Valley Bank Failures. Advances in Economics, Management and Political Sciences,50,7-15.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
Disclaimer/Publisher's Note
The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.
About volume
Volume title: Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and
conditions of the Creative Commons Attribution (CC BY) license. Authors who
publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons
Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this
series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published
version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial
publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and
during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See
Open access policy for details).