Strategic Suggestions for Banks to Deal with Balance Sheet Risk

Silicon Valley banks' collapse resulted from poor investment decisions (mismanagement of assets and liabilities), causing a bank run due to substantial losses. This paper explores the causes of Silicon Valley Bank's failures due to exposure to balance sheet risks. Its failure profoundly affected the balance sheet risk management of small and medium-sized banks in the US and China. We take a Chinese bank (Guiyang Rural Commercial Bank) to analyze its situation and problems guided by the lessons learned from the SVB incident. On this basis, we propose strategic recommendations for dealing with balance sheet risk and the possible future direction for addressing the balance sheet risk of Guiyang Rural Commercial Bank.