Why do banks fail?

Last fall, I prepared a short 15 minute video lecture around the question why banks fail. The motivation was a series of bank defaults or bank runs following the Silicon Valley Bank (SVB) failure in March’23 both in the US but also in Europe (see Credit Suisse).

Digging deeper into the question as to why some banks experienced severe problems during this time seems important. This short lecture does exactly that and tries to differentiate between two types of bank runs:

1. A “Diamond-Dybvig” type bank run (this is why Doug Diamond and Phil Dybvig received the Nobel prize)

2. A “solvency-based” bank run

Learn more in the video lecture and slides.

Feel free to get in touch with questions or comments.