Ep. 72: A textbook bank run
In the middle of the day on Friday, March 10, 2023, bank regulators swiftly shut down Silicon Valley Bank (SVB), arguably averting a wider panic. Compared to past financial crises, it was not especially economically significant, but it stands out as an important, illustrative example of the economics of banking. In a paper in the Journal of Economic Perspectives , author Andrew Metrick explains the causes behind SVB's failure and how the government responded. He says that understanding the collapse of SVB is a stepping stone to making sense of more complicated financial crises such as the Global Financial Crisis . Metrick recently spoke with Tyler Smith about why Silicon Valley Bank failed and what policymakers can do to prevent financial crises.