Revelations from the Collapse of Silicon Valley Bank: From the Perspective of Risk Management of Financial Institutions
Keywords:
Financial Regulation, Silicon Valley Bank, Risk ManagementAbstract
This article examines the main reasons for the collapse of Silicon Valley Bank (SVB) in March 2023 from a regulatory and risk management perspective. By analyzing SVB Financial Group’s 10-K filings, we found that the economic value of its equity was indicative of excessive interest rate risk on SVB’s balance sheet more than a year before it collapsed. Our analysis reveals significant shortcomings in SVB’s risk management practices, but also highlights weaknesses in the financial regulatory regime. The paper concludes with a few recommendations that provide useful ideas for policymakers, regulators, and risk managers.
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