April 25, 2023
Tech News World recently published an article featuring Mark Williams, Master Lecturer of Finance, discussing Twitter amplifying the Silicon Valley Bank collapse.
The bank run on Silicon Valley Bank (SVB) fueled by social media sent shock waves through the US banking system. The failure of SVB was preceded by a significant spike of public communication on Twitter by apparent depositors who used the forum to discuss the trouble the bank was facing and, more importantly, their plans to withdraw their deposits, according to a report published last week by a group of university professors using Twitter data.
The openness and speed of this harmonization around a bank run are unprecedented. Williams states, “The effect influencer tweets had on the speed and size of the SVB bank demonstrated the speed in which social media has accelerated the speed and the reach of communication. SVB failed because of the bad risk management and crypto contagion that spread across the industry. What Twitter did was speed up the process of the failure”.
The researchers say the social-media-fueled run on SVB has serious implications for financial institutions. They noted that Silicon Valley Bank faced a novel channel of run risk unique to the social media era.
