Explanation:
A significant risk factor for SVB was its heavy reliance on large uninsured deposits from the technology and life sciences sectors. This deposit concentration linked the bank's funding directly to the performance of these sectors, making it highly susceptible to sector-specific downturns and contributing to its rapid failure when these sectors faced challenges.
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Q.5562 What was a major risk factor contributing to the rapid failure of Silicon Valley Bank (SVB)?
A
SVB's excessive investment in short-term government bonds, leading to low returns.
B
The bank's heavy reliance on insured deposits from diversified retail clients.
C
SVB's concentration in large uninsured deposits primarily from the technology and life sciences sectors.
D
An overemphasis on traditional banking services, such as mortgage lending and consumer credit.
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