Why has the interest rate hikes caused midsized banks to fail (3 so far) in the US but NOT small banks? Note: I know why the banks failed just why the reasons don’t seem to affect smaller banks!
In: 4
A large bank is able to take risks but is large enough to cover their own risks, so they’re safe.
A small bank is unlikely to take risks because they have fewer assets, so they’re (relatively) safe.
If a mid-sized bank takes some risks, they’re not big enough to necessarily cover their risks. But taking risks is what can grow the bank, so some of them will ultimately take a shot at it. If it’s a bad pick, they can lose everything.
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