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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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.
Responding to the senators' queries, Tetangco said he was not aware of 'any adverse impacts in the form of bank runs' in other countries that have lifted their bank secrecy laws.
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.
Prospects that from now on the troika will demand that private depositors take a hit as the price of a bailout raises the specter of bank runs in countries like Italy and Spain.
A bank run occurs if at least one patient depositor withdraws.
BANK RUNS Draghi was speaking at a packed parliament hearing as head of the region's recently created super-watchdog, the European Systemic Risk Board (ESRB), but questions and his answers regularly centred on the role of the ECB.
Many financial systems were plagued by bank runs or subject to the risk of contagion when the recent financial tsunami unfolded.
A bank run provides a clear example of a coordination game, much like choosing which side of the road to drive on.
Over a year later, the real investigation into who was responsible for the information leak which started the pounds 13.9 billion bank run leading to the nationalisation of Northern Rock, has yet to start.
Northern Rock were at the centre of the UK's first bank run for 140 years last September after a funding crisis sparked by the credit crunch.
But the FSA is unlikely to call for an inquiry into the conduct of the former directors of Northern Rock, which was at the centre of the UK's first bank run in more than 140 years.