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When giants fall: Tracing the ripple effects of Silicon Valley Bank (SVB) collapse on global financial markets

Author

Listed:
  • Naveed, Muhammad
  • Ali, Shoaib
  • Gubareva, Mariya
  • Omri, Anis

Abstract

Using an event study approach, we examine how the forex, metal, energy, and cryptocurrency markets responded to the SVB collapse. We observe that the forex and metal markets respond positively on event and post-event days. In contrast, the cryptocurrency market reacts negatively but generates positive abnormal returns, indicating that investors may seek refuge in these purported safe-havens. However, the energy market responded adversely to the event, and the trend continued in the aftermath. The study advocates the need for monitoring and minimizing financial contagion risk due to the increased interconnectedness of the financial markets. Our findings highlight the perilous consequences of the SVB collapse, as it triggered contagious effects that may spread throughout the global financial markets. Therefore, investors and financial institutions must diversify their portfolios across various asset classes, which can help mitigate the risks of such events.

Suggested Citation

  • Naveed, Muhammad & Ali, Shoaib & Gubareva, Mariya & Omri, Anis, 2024. "When giants fall: Tracing the ripple effects of Silicon Valley Bank (SVB) collapse on global financial markets," Research in International Business and Finance, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:riibaf:v:67:y:2024:i:pa:s0275531923002866
    DOI: 10.1016/j.ribaf.2023.102160
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    Keywords

    Bank run; SVB collapse; Event study; Financial markets; Contagion;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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