Silicon Valley Bank Bankruptcy: Inescapable Financial Crisis or Man-made Failure?

Against rising interest rates, high inflation, and financial difficulties in the technology sector, the second largest bank bankruptcy in US history - the Silicon Valley Bank (SVB) bank run - occurred. What factors led to this bank run? First, we analyze SVB's balance sheet. We find that SVB's portfolio is risky because of a large duration mismatch between assets and liabilities. Second, there is a discussion of the impact of incomplete and lax supervision of the SVB. Third, after the risk of catastrophic loss became abundantly clear, the human element of self-interest of executives played a subtle but important role in leaving the asset-liability mismatch in place.