SVB crisis: What is contagion risk, and is it expected to spread to India?

SVB collapse: Just a couple of days after US regulators shut the bank down on Friday, Signature Bank also shut its doors, spreading the fears of contagion

The collapse of the Silicon Valley Bank (SVB) has spread fears not only in the tech industry but also in the banking sector. Just a couple of days after US regulators shut the bank down on Friday, Signature Bank also shut its doors. According to Reuters, it is the third largest bank in US history to fail after Washington Mutual Bank (2008) and SVB.

This has spread fears of contagion risk in the industry.

What is contagion risk?

Contagion risk is the risk that financial difficulties at one or more banks will spill over to other banks or the financial