Bank Run

Bank Run: A bank run occurs when a large number of customers withdraw their deposits simultaNeously, fearing that the bank will become insolvent. This can lead to a Liquidity crisis for the bank, as banks typically do not keep enough cash on hand to cover all deposits, having lent out a significant portion of their funds.

Examples of bank runs include:

• The Great Depression (1930s): A significant number of bank runs occurred in the United States, leading to widespread Bank Failures.
• Northern Rock (2007): The UK bank faced a run after news spread about its financial troubles, prompting customers to withdraw their savings en masse.
• Cyprus Banking Crisis (2013): Customers rushed to withdraw funds from banks amidst fears of a financial collapse, leading to bank closures and Capital controls.