“Social media fueled a bank run on Silicon Valley Bank (SVB), and the effects were felt broadly in the U.S. banking industry,” reads the first line of an academic paper discussing the role of social media in last month’s collapse of tech bank SVB.
The study, led by J. Anthony Cookson of the University of Colorado Boulder, said that social media chatter “amplified” the risks that ultimately led to the bank’s failure.
In March, SVB, a bank that primarily served startup businesses, became the largest bank failure in the United States since the 2008 financial crisis and the second-largest ever in U.S. history, all within a 48-hour period. Members of the venture capital community, who were investors in the very companies affected by SVB’s collapse, have expressed remorse over their role in spreading panic, with one referring to it as a “hysteria-induced bank run caused by VCs.”…