Social Media as a Financial institution Run Catalyst
A group of economists (J. Anthony Cookson, Corbin Fox, Javier Gil-Bazo, Juan Felipe Imbet and Christoph Schiller) analyse how social media acts as a catalyst for financial institution run:
Social media fueled a financial institution run on Silicon Valley Financial institution (SVB), and the consequences have been felt broadly within the U.S. banking business. We make use of complete Twitter information to point out that preexisting publicity to social media predicts financial institution inventory market losses within the run interval even after controlling for financial institution traits associated to run threat (i.e., mark-to-market losses and uninsured deposits). Furthermore, we present that social media amplifies these financial institution run threat components. Throughout the run interval, we discover the depth of Twitter dialog a few financial institution predicts inventory market losses on the hourly frequency. This impact is stronger for banks with financial institution run threat components. At even increased frequency, tweets within the run interval with damaging sentiment translate into quick inventory market losses. These excessive frequency results are stronger when tweets are authored by members of the Twitter startup group (who’re probably depositors) and include key phrases associated to contagion. These outcomes are per depositors utilizing Twitter to speak in actual time through the financial institution run.
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