One way to measure the magnitude of a bank’s failure is by the amount of assets the bank held. By that measure, SVB’s collapse is the second largest bank failure of all time, and the largest since 2008.
The vast majority of failures since 2000 have been smaller regional banks.
SVB is the second largest bank failure of all time.
Bank failures, by value of assets
Source: FDIC. Built on yarn.tech
Small banks can be more susceptible to failure. Their assets are usually more concentrated and they don’t have the same access to funding as larger banks. When customers rush to withdraw their money en-masse, a bank needs to sell its assets or raise funding to enable the withdrawals.
When a bank can’t meet obligations, such as withdrawals by customers, regulators step in to shut down the bank. This sort of bank failure is reasonably common; SVB is the 562nd failure since Oct 2000. Periods of financial crises spark more bank failures, but banks fail even in “normal” times.
Several banks failed during the Great Financial Crisis.
Failed banks over time, since Oct 2000
Source: FDIC.
