A bank failure wipes out the money available to its customers and freezes any capital that’s already in circulation. Depositors, borrowers and owners or shareholders all suffer as a result, as does wider economic activity and often the communities or business sectors that the banks serves.
These issues can become all the more concentrated in the wake of a regional or specialist banking collapse due to the specific reach of the failed institution. Silicon Valley Bank (SVB) is the second largest bank failure in US history but its focus was specific, it specialised in providing funding to start-ups, venture capitalists and technology firms.
This banking collapse reminds us of a spate of private bank failures that created a financial crisis at the start of 19th century in England and Wales. Although these banks all differed from SVB in terms of scale and volume of finance provided, these early 19th-century institutions served specific communities.
