The bankruptcy of the American Silicon Valley Bank causes panic among investors. There are even faint whispers of a new credit crunch. “Investors see this as the start of the avalanche,” says Nico Inberg of De Aandeelhouder.
Banks suddenly became less than billion on the stock exchange on Friday. Within hours, banking giants like JP Morgan and Wells Fargo lost billions in market value. Dutch banks such as ING and ABN AMRO also suffered heavy losses. This has everything to do with the bank run that occurred after a failed stock issue. This stampede ultimately proved fatal for the California bank.
Also listen | US Bank Rush Fears: Will More Banks Get Infected?
Although the big banks are not directly experiencing the problems of bankruptcy, the fear of contagion is great. ‘You see a shock reaction on the stock market. This is because all banks are indirectly related to each other. For example, banks lend money to each other. Furthermore, they fear a snowball effect.’
“When someone says there’s no need to panic, it’s often time to run.”
According to Inberg, the nervous reaction is also due to the lack of information. It is often difficult to read a bank’s balance sheet: ‘Banks will do everything they can to keep the peace in troubled times. If someone says there’s no need to panic, it’s time to run.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
