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 ?
Fourth, we are convinced that the risk of bank run in the V4 countries is not only theoretical and imaginary eventuality but deserves a serious research interest.
Vassilev, who is in neighbouring Serbia and awaiting a court decision on whether to extradite him, has denied any wrongdoing and said the bank run was a plot hatched by his competitors in collusion with some state officials.
Could all this end up with bank runs that bring down the euro itself?
As a result of the blow-back and fears of bank runs, Greek lawmakers revised the plan so it would spare savers with less than a[logical not]20,000.
Furthermore, in the environment considered here, a bank run is driven by the information about a bank's portfolio return.
Ironically, the run on BEA means that Hong Kong had a run on its fifth largest bank--its worst bank run in more than a decade--shortly after the launch of its Deposit Protection Scheme in September 2006.
A bank run provides a clear example of a coordination game, much like choosing which side of the road to drive on.
Chancellor Alistair Darling, who was forced to step in to guarantee savers' deposits to end the bank run, will have the final say over any rescue plans for the group.
NORTHERN Rock's embattled bosses have denied there was anything more they could have done to prevent the crisis that led to the first bank run in nearly 150 years.
The Rock chiefs denied there was anything more they could have done to prevent the crisis that led to the first bank run in nearly 150 years.
Appearing before the Commons Treasury Committee, Matt Ridley insisted that the global credit crunch which led to last month's bank run could not have been foreseen.
A bank run occurs when depositors believe that their bank will be unable to honor all of its deposit liabilities; depositors rush to the bank and attempt to withdraw as much of their money as they can, in order to avoid losing all or most of it.