The dot-com crash showed that a sharp stock market decline does not necessarily lead to a banking crisis. In the late 1990s, technology companies relied heavily on equity financing, so investors absorbed much of the losses when stock prices collapsed.
Today’s AI boom is different. While large technology companies fund much of their own investment, borrowing from nonbank lenders and other channels plays a much bigger role. This creates less visible risks for banks, making it harder to understand where problems could emerge and how they might spread, explains Diane Ellis, a senior managing director at IntraFi.
Read the article for insights on how market downturn could affect bank lending, collateral values, and liquidity, and which banks may be better positioned to withstand the fallout.