You might have heard of the run on Silicon Valley Bank (SVB) in the spring of 2023. This question explores that event. Banks have specialized balance sheets. Checking accounts and other deposits by households and firms are the largest liabilities on a bank’s balance sheet. Deposits are a liability to banks because they are funds the banks owe to customers, but deposits are an asset to the households and firms that made the deposits. Banks’ major assets are its loans to customers and bonds that it has purchased. Households typically borrow from banks to buy cars and houses, and businesses borrow from banks when they need to finance inventories or to bridge the gap between payments they make and payments they receive. SVB had invested in bonds whose prices declined during 2022 and 2023. As a result, there was a run on the bank, which means that many depositors moved their money to other banks. Keeping in mind the concept of a firm’s net worth, why would a bank’s depositors be concerned by a decline in the value of a bank’s assets.