Social Media as a Bank Run Catalyst

53 Pages Posted: 24 Apr 2023

See all articles by J. Anthony Cookson

J. Anthony Cookson

University of Colorado at Boulder - Leeds School of Business

Corbin Fox

James Madison University- Department of Finance

Javier Gil-Bazo

Universitat Pompeu Fabra; UPF Barcelona School of Management; Barcelona School of Economics

Juan Felipe Imbet

Université Paris Dauphine - Department of Finance

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: April 18, 2023

Abstract

Social media fueled a bank run on Silicon Valley Bank (SVB), and the effects were felt broadly in the U.S. banking industry. We employ comprehensive Twitter data to show that preexisting exposure to social media predicts bank stock market losses in the run period even after controlling for bank characteristics related to run risk (i.e., mark-to-market losses and uninsured deposits). Moreover, we show that social media amplifies these bank run risk factors. During the run period, we find the intensity of Twitter conversation about a bank predicts stock market losses at the hourly frequency. This effect is stronger for banks with bank run risk factors. At even higher frequency, tweets in the run period with negative sentiment translate into immediate stock market losses. These high frequency effects are stronger when tweets are authored by members of the Twitter startup community (who are likely depositors) and contain keywords related to contagion. These results are consistent with depositors using Twitter to communicate in real time during the bank run.

Keywords: Bank Runs, Social Media, Social Finance, FinTech

JEL Classification: F30, F36, G38, Q50

Suggested Citation

Cookson, J. Anthony and Fox, Corbin and Gil-Bazo, Javier and Imbet, Juan Felipe and Schiller, Christoph, Social Media as a Bank Run Catalyst (April 18, 2023). Available at SSRN: https://ssrn.com/abstract=4422754 or http://dx.doi.org/10.2139/ssrn.4422754

J. Anthony Cookson

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Corbin Fox

James Madison University- Department of Finance ( email )

Zane Showker Hall
Harrisburg, VA 22801
United States

HOME PAGE: http://www.corbinfox.com

Javier Gil-Bazo

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

UPF Barcelona School of Management ( email )

Carrer de Balmes, 132, 134
Barcelona, 08008
Spain

Barcelona School of Economics ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Juan Felipe Imbet

Université Paris Dauphine - Department of Finance ( email )

Place du Maréchal de Lattre de Tassigny
Paris Cedex 16, 75775
France

Christoph Schiller (Contact Author)

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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