Bank run

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Bank run (bank panic)

A series of unexpected cash withdrawals caused by a sudden decline in depositor confidence or fear that the bank will be closed by the chartering agency, i.e. many depositors withdraw cash almost simultaneously. Since the cash reserve a bank keeps on hand is only a small fraction of its deposits, a large number of withdrawals in a short period of time can deplete available cash and force the bank to close and possibly go out of business.

Bank Run

An event in which many account holders at a bank withdraw all of their funds at the same time because they do not believe the bank is solvent. Ironically, the pressure of a bank run itself can cause the bank to become insolvent. In the United States, bank runs were fairly common before the creation of the FDIC, which insures bank deposits up to a certain amount. See also: Panic.
References in periodicals archive ?
But there would be a nationwide bank run if they reopened the banks without strict limits on cash withdrawals and transfers overseas.
Fear of a bank run has led the government, which is led by Nicos Anastasiades, to keep banks closed until at least Thursday.
1) The view on fundamental-based bank runs argues that bank runs occur when depositors receive negative information about their bank's portfolio returns or about an aggregate liquidity shock.
On the surface, these measures of higher or full deposit insurance coverage have succeeded in containing bank runs, at least temporarily.
By effectively eliminating bank runs, deposit insurance has the unintended effect of reducing market discipline and increasing incentives for banks to take on risk.
Some scholars have recently argued that the multiple-equilibria-plus-sunspots explanation of bank runs is inconsistent with available evidence showing that bank runs have historically been strongly correlated with deteriorating economic fundamentals (see Gorton [1988]; Allen and Gale [1998]; and Schumacher [2000]).
The combination of deposit insurance and a central bank providing discount window credit has made the contagion of bank runs that often characterized the nineteenth century and the first third of the twentieth century an anachronism.
This chapter wrestles with one of the gigantic theoretical issues in banking; the need for government provided deposit insurance to prevent bank runs.
The bank runs all its financial applications over Citrix but remote access still proved to be a challenge with degraded response times.
At present, the Bank runs around 5,330 branches across India.
Global Banking News-July 2, 2014--Bulgarian authorities say bank runs have been halted
BRUSSELS: The European Central Bank (ECB) yesterday stepped up pressure for a joint guarantee for bank deposits across the euro zone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.