Post SVB Banking Sector Outlook

Dear Colleagues,

As of December 2022, Silicon Valley Bank (SVB) held the 16th position among the largest banks in the United States, boasting assets totalling around USD 209 billion. However, it faced a sudden collapse on 10 March 2023, triggered by a sequence of events that culminated in a bank run and a critical shortage of capital. This marked the second-largest bank failure in U.S. history, following only the collapse of Washington Mutual in 2008. SVB had been a vital institution, serving nearly half of all U.S. venture-backed technology and life science companies. Its failure raised concerns about the funding and liquidity of these businesses. SVB also had international operations, including in Australia, and its collapse had the potential to send shockwaves through the global financial system.

This Special Issue is dedicated to exploring the interplay between credit and liquidity in shaping bank earnings and profitability, the effects of new capital requirements on the banking sector, and the influence of large language models and AI on banking efficiency. The objective is to provide insights into the immediate impacts of these significant challenges on the banking sector and propose policy measures that central banks worldwide could employ to mitigate these effects. We encourage the use of state-of-the-art econometric, mathematical, statistical, and machine-learning methods to address these issues, drawing from both theoretical and empirical approaches.

Dr. Sagarika Mishra
Guest Editor

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• liquidity
• credit
• capital requirement
• language models
• bank efficiency