The deposit glut: Lessons from the failure of Silicon Valley Bank

Guillaume Vuillemey 

Recent years have been described as marked by a ‘saving glut’ and a recurring hypothesis is that the saving glut also spurs financial instability. This column tests this hypothesis in the context of the recent failure of Silicon Valley Bank in March 2023. It finds that banks with higher exposure to local wealth inequality and higher exposure to intangible-intensive firms – both seen as root causes of the ‘saving glut’ – faced significantly larger stock price drops around the date the bank failed. The interaction between savings and financial instability has important implications for deposit insurance systems and large uninsured deposits.

Πηγή: Voxeu

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