Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks?

Hauf, Patrick; Posth, Jan-Alexander

doi:10.2139/ssrn.4411102

Publication type:	Working paper – expertise – study
Title:	Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks?
Authors:	Hauf, Patrick Posth, Jan-Alexander
et. al:	No
DOI:	10.2139/ssrn.4411102
Extent:	23
Issue Date:	17-Apr-2023
Publisher / Ed. Institution:	SSRN
Language:	English
Subjects:	Silicon Valley Bank (SVB); Economic value of equity; Basel III; Residential mortgage-backed securities (RMBS); Risk management
Subject (DDC):	332.1: Banks
Abstract:	This paper examines the major causes of Silicon Valley Bank’s (SVB) collapse in March 2023 from a regulatory and risk management perspective. Using SVB Financial Group’s 10-K filings, we show that the economic value of equity pointed to excessive interest rate risks in SVB’s balance sheet over one year before the actual collapse. Our analysis reveals major weaknesses in SVB’s risk management practice but also underlines weaknesses in the US regulatory regime reaching from reporting exemptions for small banks in the domain of liquidity and interest rate risks, non-sufficiently sensitive monitoring ratios, and misalignments between accounting and risk management principles hindering effective oversight. The paper concludes with several recommendations to provide food for thought for policymakers, regulators, and risk managers.
URI:	https://digitalcollection.zhaw.ch/handle/11475/30016
License (according to publishing contract):	Licence according to publishing contract
Departement:	School of Management and Law
Organisational Unit:	Institute of Wealth & Asset Management (IWA)
Appears in collections:	Publikationen School of Management and Law

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Hauf, P., & Posth, J.-A. (2023). Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks? SSRN. https://doi.org/10.2139/ssrn.4411102

Hauf, P. and Posth, J.-A. (2023) Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks? SSRN. Available at: https://doi.org/10.2139/ssrn.4411102.

P. Hauf and J.-A. Posth, “Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks?,” SSRN, Apr. 2023. doi: 10.2139/ssrn.4411102.

HAUF, Patrick und Jan-Alexander POSTH, 2023. Silicon Valley Bank : (Why) Did regulation and risk management fail to uncover substantial risks? SSRN

Hauf, Patrick, and Jan-Alexander Posth. 2023. “Silicon Valley Bank : (Why) Did Regulation and Risk Management Fail to Uncover Substantial Risks?” SSRN. https://doi.org/10.2139/ssrn.4411102.

Hauf, Patrick, and Jan-Alexander Posth. Silicon Valley Bank : (Why) Did Regulation and Risk Management Fail to Uncover Substantial Risks? SSRN, 17 Apr. 2023, https://doi.org/10.2139/ssrn.4411102.