Bank Run

Definition

A bank run occurs when a large number of depositors withdraw their money from a bank due to concerns about the bank's solvency or stability. This can lead to a liquidity crisis for the bank, making it difficult for them to meet the demands of all depositors.

Related terms

Solvency: The ability of a bank or any institution to meet its long-term financial obligations.

Liquidity Crisis: A situation where an individual or entity does not have enough cash or easily convertible assets to meet short-term financial obligations.

Deposit Insurance: A system in which deposits made by individuals in banks are insured against loss up to a certain amount per depositor by the government or another agency.