Analyzing the Role of Duration Mismatch in the Collapse of Silicon Valley Bank

This paper focuses on the role of duration mismatch in the context of the Silicon Valley Bank (SVB) failure. The failure was one of the major banking failures that took place in the U.S. SVB used short-term liabilities to finance long-term assetsa significant duration risk for the bank, especially with rising interest rates. We look at the measures of capital, bank leverage, and solvency ratios. We also analyze the decisions made by the executives that worsened the situation. So far, we have analyzed the banks poor risk management, particularly during periods without a chief risk officer at critical junctures. Subsequent revisions will consider other factors, including the more extensive legal framework and how SVBs external economic environment may have contributed to its collapse. The paper thus provides insights regarding the stewardship and leadership lessons around managing the risk associated with the duration gap.