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Responses of US equity market sectors to the Silicon Valley Bank implosion

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  • Yousaf, Imran
  • Goodell, John W.

Abstract

Considering the new role of social media to quickly effect bank runs, it is critical to investigate the impact of the Silicon Valley Bank (SVB) collapse on US market sectors. Using an event study approach, we identify significant (negative) abnormal returns on the event date only for the financial, materials, and real estate sectors, with no sector reactions for the pre-event period. The most significant impact, not surprisingly, was to the financial sector. Results are consistent with the SVB failure not being anticipated by investors and subsequent impacts to most sectors being shared at the market level with limited heterogeneity.

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  • Yousaf, Imran & Goodell, John W., 2023. "Responses of US equity market sectors to the Silicon Valley Bank implosion," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003069
    DOI: 10.1016/j.frl.2023.103934
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    Cited by:

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    11. Liu, Xia & Megginson, William & Tran, Nhu & Wei, Siqi, 2024. "Who Loses Most When Big Banks Suddenly Fail? Evidence from Silicon Valley Bank Collapse," Finance Research Letters, Elsevier, vol. 59(C).
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    13. Stephens, John & Mehdian, Seyed & Gherghina, Ștefan Cristian & Stoica, Ovidiu, 2023. "The reaction of the financial market to the January 6 United States Capitol attack: An intraday study," Finance Research Letters, Elsevier, vol. 56(C).
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    15. Galati, Luca & Capalbo, Francesco, 2024. "Silicon Valley Bank bankruptcy and Stablecoins stability," International Review of Financial Analysis, Elsevier, vol. 91(C).
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    17. Bales, Stephan & Burghof, Hans-Peter, 2024. "Public attention, sentiment and the default of Silicon Valley Bank," The North American Journal of Economics and Finance, Elsevier, vol. 69(PA).
    18. Esparcia, Carlos & Escribano, Ana & Jareño, Francisco, 2023. "Did cryptomarket chaos unleash Silvergate's bankruptcy? investigating the high-frequency volatility and connectedness behind the collapse," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Bank runs; Banking crises; Financial stability; US market sectors; SVB failure;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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