INSIDE SOURCES

Social media and the role it played in the collapse of Silicon Valley Bank

Apr 24, 2023, 8:00 PM

FILE - Security guards let individuals enter the Silicon Valley Bank's headquarters in Santa Clara,...

FILE - Security guards let individuals enter the Silicon Valley Bank's headquarters in Santa Clara, Calif., March 13, 2023. A professor from the University of Colorado joined Inside Sources on Monday to discuss social media's influence in the collapse of the California bank. Photo credit: Benjamin Fanjoy/Associated Press.

SALT LAKE CITY — Earlier this year, Silicon Valley Bank became the largest bank failure since 2008.

In the immediate aftermath, social media was blamed for the bankruptcy of the California-based bank. Recently, a group of professors from around the United States released a report indicating how social media can be a springboard for bank runs.

Tony Cookson, an associate professor of finance at the University of Colorado, joined Inside Sources with Boyd Matheson on Monday to discuss how social media is increasing the risk. 

Matheson started off the conversation by asking, “Give us the premise in terms of what you were going after as you looked at social media and the impact it has as a bank run catalyst?”

Pointing the finger at social media

Cookson says right after the bank’s collapse, media outlets had pointed out that social media was active right before the bank run.

“So, we were actually kind of dually motivated by sort of this as well as the really long-lasting literature on bank run and where the role of communication is really important,” Cookson said.

Cookson says he and the other group of professors collected comprehensive Twitter data. With this data, they looked at the intensity of conversations around various banks in the banking industry. 

“And we found that those that sort of had more intensive conversations in the months prior,” Cookson said. “Not necessarily during the run. But a couple of months earlier, were actually those that experienced the greater depth of (greater stock price losses).”

Cookson says the research indicates social media can be a risk facing the banking industry.

“So, we sort of took that as evidence that this pre-exposure to intense conversations on Twitter is sort of a risk that sort of faces banks,” he said.

Influencing bank run at Silicon Valley Bank

Matheson asked, “So kind of describe for our listeners in terms of how that influenced what was going on and how that may have ultimately been part of the equation in terms of the run?”

Cookson says they looked at the pre-exposures a couple of months earlier. And then, the group of professors also looked at conversations a couple of days before the Silicon Valley Bank collapse.

“One thing that was kind of interesting about SVB is that their ticker was SIV,” Cookson said. “And so you could actually distinguish when investors were talking about the bank versus general conversation about where people refer to it as SVB.”

He says when they looked at the time series of events, the investment conversation happened first. The conversation then carried over into a general conversation.

“And we saw that actually people who were tweeting in that community tended to really actually amplify the stock losses during this period,” he said. “Which is notable, because bank run doesn’t happen because investors are talking about a bank. It happens because depositors are communicating with one another.”

Listen to the entire segment.

 

Inside Sources with Boyd Matheson can be heard weekdays from 1 p.m. to 3 p.m. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app. 

Read more:

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Inside Sources

a person holds a smartphone, is the us moving away from organized religion?...

Isabella Sandston

LISTEN: Why we’re turning to politics for our lost worship

Is a shift away from organized religion feeding into the loss of community amongst Americans?

19 days ago

A green and brown sign hangs on a brick wall. It reads "The future of the world is in this classroo...

Mariah Maynes

Study looks into Utah voters’ opinions on curriculum transparency in schools

A Sutherland Institute study found that a majority of Utah voters support curriculum transparency. However, fewer of them support mandating it with legislation. 

28 days ago

Mitt Romney shown...

Sam Herrera

LISTEN: Romney talks budget, wildfires and TikTok

Sen. Mitt Romney says Democrats and Republicans needed to work together to budget and build legislation that will actually pass.

1 month ago

Utah Rep. John Curtis discusses how a “stunt” by TikTok to influence House lawmakers just anger...

KSL NewsRadio

TikTok ‘stunt’ backfires as House lawmakers push to change company ownership

Utah Rep. John Curtis discusses how a “stunt” by TikTok to influence House lawmakers just angered them.

2 months ago

Dow...

Curt Gresseth

Dow closes down more than 500 points

The Dow dropped more than 750 points before closing down 525 points as inflation numbers rose higher than economists were anticipating.

2 months ago

cellphone schools...

Curt Gresseth

Governor’s message to students: ‘hang up and learn’

Gov. Spencer Cox wants cellphones to be banned in Utah schools during instruction time.

3 months ago

Sponsored Articles

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Mother and cute toddler child in a little fancy wooden cottage, reading a book, drinking tea and en...

Visit Bear Lake

How to find the best winter lodging in Bear Lake, Utah

Winter lodging in Bear Lake can be more limited than in the summer, but with some careful planning you can easily book your next winter trip.

Happy family in winter clothing at the ski resort, winter time, watching at mountains in front of t...

Visit Bear Lake

Ski more for less: Affordable ski resorts near Bear Lake, Utah

Plan your perfect ski getaway in Bear Lake this winter, with pristine slopes, affordable tickets, and breathtaking scenery.

Social media and the role it played in the collapse of Silicon Valley Bank