top of page
  • LinkedIn
  • White Twitter Icon

The dangers of digital bank runs

Crisis Intervention Group

22. Apr. 2023

How social media can generate or accelerate a bank run

Gillian Tett of the Financial Times has penned an intriguing article called 'Wake up to the dangers of digital bank runs,' which delves into an academic research paper exploring the impact of social media on the SVB collapse. The article is behind a paywall, but we've provided a condensed summary for you below.

With a myriad of regulatory, ethical, and business concerns to consider, the most critical issue for every company is figuring out how to handle an impending social media crisis.


A team of American economists analyzed 5.4 million tweets following the collapse of Silicon Valley Bank (SVB), which was labeled as the world's first "Twitter-fueled bank run" by House Financial Services Committee chair Patrick McHenry. Their study concluded that social media exposure led to bank run risk instead of simply reflecting it, and banks with a large pre-existing exposure to social media performed much worse during the SVB bank run. The study highlighted that banks and governments are not prepared to deal with the challenges posed by a social media-infused world that operates at warp speed.


As the Federal Reserve prepares to release its own report on the SVB collapse, some possible steps to address the situation include operating the Fed's discount window 24-7, improving how regulators track signals of impending stress on social media, changing liquidity coverage rules to prepare for faster bank runs, and exploring measures to restrict the speed of deposit outflows in a crisis. However, it seems the only effective option to quell a cyber panic quickly might be for governments to backstop the system themselves by protecting depositors. This raises further questions about the future of banks and the potential need for government support for non-banks such as money market funds in case of similar crises.

© 2023 by Crisis Intervention Group.

bottom of page