Managing and Reporting Liquidity Risks: Silicon Valley Bank Case
Liquidity problems are one of the most important causes of business failures. This risk can appear related to the funding structures and asset quality of the enterprises. In an enterprise operating in the banking sector, liquidity problems have the potential to contaminate the financial system and c...
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| Format: | Article |
| Language: | English |
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Istanbul University Press
2023-08-01
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| Series: | Muhasebe Enstitüsü Dergisi |
| Subjects: | |
| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/8D215596E49D4D919BEA5DDB42F4C6A2 |
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| author | Gürol Baloğlu Kaan Ramazan Çakalı Nazan Güngör Karyağdı Kadir Gökoğlan |
| author_facet | Gürol Baloğlu Kaan Ramazan Çakalı Nazan Güngör Karyağdı Kadir Gökoğlan |
| author_sort | Gürol Baloğlu |
| collection | DOAJ |
| description | Liquidity problems are one of the most important causes of business failures. This risk can appear related to the funding structures and asset quality of the enterprises. In an enterprise operating in the banking sector, liquidity problems have the potential to contaminate the financial system and create social impacts, since funding is mainly composed of deposits. Therefore, liquidity risk in banking is among the risks that are closely monitored. The recent Silicon Valley Bank collapse offers important lessons for analyzing liquidity risks. In this study, the Silicon Valley Bank failure is analyzed as a case study. As changes in macroeconomic policies have an impact on the liquidity of the markets, it becomes important to monitor liquidity risks. In general, the liquidity risks in the banking system are followed with the ratios calculated over the scenarios, while the Silicon Valley Bank case in the USA showed that regulatory agencies do not use this monitoring mechanism for banks below a certain size. On the other hand, the weaknesses arising from financial reporting standards in reporting the asset quality, combined with this lack of monitoring, caused difficulties in monitoring liquidity risks for financial statement users. As a result, the demand for cash created by depositors in the banking sector caused the bankruptcy of Silicon Valley Bank. Lessons learned from this case can guide the active management of liquidity risks. |
| format | Article |
| id | doaj-art-72ad3236bf0b4746b23c6cd40cf8bd86 |
| institution | OA Journals |
| issn | 2667-6982 |
| language | English |
| publishDate | 2023-08-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | Muhasebe Enstitüsü Dergisi |
| spelling | doaj-art-72ad3236bf0b4746b23c6cd40cf8bd862025-08-20T02:27:16ZengIstanbul University PressMuhasebe Enstitüsü Dergisi2667-69822023-08-0169678910.26650/MED.1301779123456Managing and Reporting Liquidity Risks: Silicon Valley Bank CaseGürol Baloğluhttps://orcid.org/0000-0003-1093-2664Kaan Ramazan Çakalıhttps://orcid.org/0000-0003-4186-2291Nazan Güngör Karyağdı0https://orcid.org/0000-0003-3938-4147Kadir Gökoğlan1https://orcid.org/0000-0001-6397-8477Bitlis Eren Üniversitesi, Bitlis, TurkiyeDicle Üniversitesi, Diyarbakir, TurkiyeLiquidity problems are one of the most important causes of business failures. This risk can appear related to the funding structures and asset quality of the enterprises. In an enterprise operating in the banking sector, liquidity problems have the potential to contaminate the financial system and create social impacts, since funding is mainly composed of deposits. Therefore, liquidity risk in banking is among the risks that are closely monitored. The recent Silicon Valley Bank collapse offers important lessons for analyzing liquidity risks. In this study, the Silicon Valley Bank failure is analyzed as a case study. As changes in macroeconomic policies have an impact on the liquidity of the markets, it becomes important to monitor liquidity risks. In general, the liquidity risks in the banking system are followed with the ratios calculated over the scenarios, while the Silicon Valley Bank case in the USA showed that regulatory agencies do not use this monitoring mechanism for banks below a certain size. On the other hand, the weaknesses arising from financial reporting standards in reporting the asset quality, combined with this lack of monitoring, caused difficulties in monitoring liquidity risks for financial statement users. As a result, the demand for cash created by depositors in the banking sector caused the bankruptcy of Silicon Valley Bank. Lessons learned from this case can guide the active management of liquidity risks.https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/8D215596E49D4D919BEA5DDB42F4C6A2corporate failuresliquidity riskliquidity risk managementsilicon valley bank |
| spellingShingle | Gürol Baloğlu Kaan Ramazan Çakalı Nazan Güngör Karyağdı Kadir Gökoğlan Managing and Reporting Liquidity Risks: Silicon Valley Bank Case Muhasebe Enstitüsü Dergisi corporate failures liquidity risk liquidity risk management silicon valley bank |
| title | Managing and Reporting Liquidity Risks: Silicon Valley Bank Case |
| title_full | Managing and Reporting Liquidity Risks: Silicon Valley Bank Case |
| title_fullStr | Managing and Reporting Liquidity Risks: Silicon Valley Bank Case |
| title_full_unstemmed | Managing and Reporting Liquidity Risks: Silicon Valley Bank Case |
| title_short | Managing and Reporting Liquidity Risks: Silicon Valley Bank Case |
| title_sort | managing and reporting liquidity risks silicon valley bank case |
| topic | corporate failures liquidity risk liquidity risk management silicon valley bank |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/8D215596E49D4D919BEA5DDB42F4C6A2 |
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