Run-on Deposit Saves Small Banks from Collapse
By Garvit Vyas, 05 June, 2023
After the collapse of Silicon Valley Bank and Signature Bank spread, the fear that other banks might also fall increased. It resulted in a run-on deposit mostly at the smaller banks.
Although, the FED and the FDIC are stepping in quickly to contain the damage which made customers of failed Silicon Valley Bank and the Signature Bank whole and the promising additional liquidity to other banks struggling to continue with the withdrawal requests. Also, the deposit flights from the U.S. banks continued as Credit Suisse’s collapse further shake the confidence in the banking sector.
Fed says, the United States commercial banks lost $172 billion in deposits in March 2023, as the large, small and the non-U.S. banks witnessed the deposits to decline by $90, $40, and $42 billion respectively at the same time being of March 2023. The confidence in the financial system slowly getting into track as the further bank failures calmed down.
Garvit Vyas
Analyst
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