Analysing network dynamics: The contagion effects of SVB's collapse on the US tech industry

Wu, Fan ORCID: https://orcid.org/0009-0009-0002-7434, Liu, Anqi ORCID: https://orcid.org/0000-0002-9224-084X, Chen, Jing ORCID: https://orcid.org/0000-0001-7135-2116 and Li, Yuhua ORCID: https://orcid.org/0000-0003-2913-4478 2024. Analysing network dynamics: The contagion effects of SVB's collapse on the US tech industry. Journal of Risk and Financial Management 17 (10) , 427. 10.3390/jrfm17100427

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Abstract

The collapse of Silicon Valley Bank in 2023 was historically significant, and based on past experiences with similar banking sector shocks, it is widely expected to trigger domino effects among tech giants and startups. However, based on the analysis of risk spillover networks established by VARs estimation, we find little evidence of such a spread of risk contagion. We observe a clear downward trend in the total connectedness index of large-cap tech companies right after the the SVB collapse. Moreover, the market quickly responded in a way that isolated the financial services subcategory within the tech sector, forming a distinct community in the network. This explains how the risk contagion paths were cut off. We also provide visualised comparisons of contagion paths within the tech network before and after the SVB’s collapse.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Computer Science & Informatics Mathematics
Publisher:	MDPI
ISSN:	1911-8074
Date of First Compliant Deposit:	26 September 2024
Date of Acceptance:	19 September 2024
Last Modified:	26 Sep 2024 09:39
URI:	https://orca.cardiff.ac.uk/id/eprint/172362

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