Year: 2026
Type: article
Abstract: This study examines how the collapse of Silicon Valley Bank (SVB) and heightened inflation affected shareholders wealth in U.S. financial institutions. Using daily stock returns from February 15 to March 29, 2023, we calculate abnormal and cumulative abnormal returns to measure market reactions. Applying ordinary least squares (OLS) and difference‐in‐differences methods, we record a substantial reduction in shareholder wealth linked to SVB bankruptcy, exacerbated by inflationary pressures. These results highlight the systemic nature of financial shocks, where distress in individual institution can transmit broadly across markets. Our findings enhance the literature on financial institutions by shedding the light on the protective benefits of diversification diminishing during extreme adverse events. For policymakers, investors, and firms, the findings underscore the importance of monitoring systemic risk and strengthening resilience against contagion effects in periods of heightened uncertainty.
Source: Review of Financial Economics
DOI: 10.1002/rfe.70041
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,470
OpenAlex ID: W7128947052