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Bank failure risk: A study on Silicon Valley Bank, Signature Bank, and Silvergate Capital Corporations

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  • Hamurcu Çağri

    (1 Aksaray University, Ortakoy Vocational School of Higher Education, Department of Finance, Banking & Insurance, Aksaray, Turkey)

Abstract

This study investigates whether the ratio of long-term investment to total assets, the ratio of cash on hand to total assets, and the ratio of price-to-earnings are risk indicators for bank failures. Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital Corp., which experienced bank failure, and banks that are among the 20 largest banks in the USA are analyzed with the panel data method. Analyses were made using quarterly data between 2003Q4 and 2022Q4. It is revealed that the long-term investment to total assets ratio increases the bank failure risk. The risk of bank failure varies negatively with the cash on hand to total assets ratio. Bank failure risk rises as the price-to-earnings ratio rises. In terms of revealing the factors influencing the risk of bank failure and possible consequences, it is expected that the findings obtained could contribute to the literature.

Suggested Citation

  • Hamurcu Çağri, 2023. "Bank failure risk: A study on Silicon Valley Bank, Signature Bank, and Silvergate Capital Corporations," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 19(2), pages 36-45, June.
    • Handle: RePEc:vrs:finiqu:v:19:y:2023:i:2:p:36-45:n:1
    DOI: 10.2478/fiqf-2023-0011
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    More about this item

    Keywords

    bank failure; risk; long-term investment; total assets; cash on hand; price to earns ratio;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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