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It seems like the title is incorrect: > GPT-4 identifies SVB’s biggest risk & gives good advice using 2021 balance sheet From the article GPT-4 gave the likel
by malisper 4y ago
It seems like the title is incorrect:
> GPT-4 identifies SVB’s biggest risk & gives good advice using 2021 balance sheet
From the article GPT-4 gave the likelihood of a bank run as a 1 out of 5. Yes, SVB, made some bad bets, but even with those bad bets they could have continued operating just fine. The thing that actually killed SVB was the $42 billion being withdrawn in a single day out of the $190B in total deposits.
The bad bets were the catalyst that triggered the bank run, but they were not the root cause. The root cause was SVB caters to a specific market segment, venture backed startups, that exhibit herd like behavior. All it takes is a few VCs telling their portfolio companies to move their money out of SVB and suddenly 22% of all deposits are withdrawn. I suspect few banks could survive a similar bank run. None of this is mentioned by GPT-4.
- eloff 4y agoBank runs are incredibly rare, rating it 1 out of 5 on likelihood it’s really overstating it by a LOT. I’m with the AI on this one.
- cjbprime 4y ago> From the article GPT-4 gave the likelihood of a bank run as a 1 out of 5. .. what probability would you have assigned to a SVB bank run in 2021?
- malisper 4y agoGPT-4 didn't say there's a 1 out of 5 chance of a bank run happening. On a 5 point scale from very low likelihood (1) to very high likelihood (5) GPT-4 gave a 1. GPT-4 gave the lowest score possible for how likely a bank run was to occur. Of the six options GPT-4 evaluated, GPT-4 gave the lowest risk assessment code (combination of the probability of the event occurring and how bad it would be if it were to occur) to a bank run.
- nopinsight 4y agoThe bank run would be much less likely to occur had SVB diversified away from long-term bonds as GPT-4’s output recommended and thus avoided the huge losses on its books.