200 Banks in the US Face Threat of Silicon Valley Bankruptcy

The Wall Street Journal wrote that amid the bankruptcy of Silicon Valley Bank SVB, economists found that about 200 US credit institutions were at risk of bankruptcy.

Economists said in a new study they have done that Silicon Valley’s crash came after high interest rates drained the value of its assets and worried clients withdrew their uninsured deposits, noting they found 186 banks that could be exposed to similar risks.

The newspaper report, citing a study by economists published in the Social Science Research Network, added that they calculated the losses of banks during the Federal Reserve’s campaign to raise interest rates, and also studied the share of bank funding from uninsured depositors.

The study added: “At 186 US banks, it is possible that in the event of withdrawals by uninsured depositors, insured depositors may experience a reduction in asset value because the bank will not have sufficient assets.”

Source: News

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