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Non-significant in life but significant in death: Spillover effects to euro area banks from the SVB fallout

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  • Perdichizzi, Salvatore
  • Reghezza, Alessio

Abstract

Did Silicon Valley Bank (SVB) fallout spillover to the euro area banking sector? We find that euro area banks’ cumulative abnormal returns declined by about 10% on average after the collapse of SVB. Surprisingly, we also find that investors did not react to euro area banks sharing similar vulnerabilities as SVB, such as lower liquidity and less stable funding sources. Instead, they were more concerned about the possible negative repercussions on banks’ balance sheets coming from the pace of the current monetary policy tightening.

Suggested Citation

  • Perdichizzi, Salvatore & Reghezza, Alessio, 2023. "Non-significant in life but significant in death: Spillover effects to euro area banks from the SVB fallout," Economics Letters, Elsevier, vol. 230(C).
    • Handle: RePEc:eee:ecolet:v:230:y:2023:i:c:s0165176523002562
    DOI: 10.1016/j.econlet.2023.111231
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    References listed on IDEAS

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    1. Ricardo Correa & Kuan‐Hui Lee & Horacio Sapriza & Gustavo A. Suarez, 2014. "Sovereign Credit Risk, Banks' Government Support, and Bank Stock Returns around the World," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(s1), pages 93-121, February.
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    Cited by:

    1. Qin Wang & Guangsheng Yu & Shiping Chen, 2023. "Cryptocurrency in the Aftermath: Unveiling the Impact of the SVB Collapse," Papers 2311.10720, arXiv.org.

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    More about this item

    Keywords

    Event study; Silicon valley bank; Spillover; Euro area banks;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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