Social Media as a Bank Run Catalyst

90 Pages Posted: 24 Apr 2023 Last revised: 24 Jun 2023

See all articles by J. Anthony Cookson

J. Anthony Cookson

University of Colorado at Boulder - Leeds School of Business

Corbin Fox

Clemson University - Wilbur O. and Ann Powers College of Business

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

Ohio State University (OSU) - Department of Finance

Date Written: April 18, 2023

Abstract

After the run on Silicon Valley Bank (SVB), U.S. regional banks entered a period of significant distress. We quantify social media's role in this distress using comprehensive Twitter data.  During the SVB run period, banks with high pre-existing exposure to Twitter lost 4.3 percentage points more stock market value. Moreover, Twitter pre-exposure interacts significantly with classical run risks to predict greater run severity and greater deposit outflows during Q1 2023, effects unexplained by other banking or market characteristics. At the hourly frequency during the run, high Twitter attention over the past four hours predicts stock market losses, especially for banks with high run risks.  By contrast, we find that negative Twitter sentiment does not amplify bank run risks.  Rather, our evidence points to a distinctive role of Twitter attention by tech community members who are likely depositors in SVB, as well as tweets that mention running and contagion. 

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). Université Paris-Dauphine Research Paper No. 4422754, 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

Clemson University - Wilbur O. and Ann Powers College of Business ( email )

Clemson, SC
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)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

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