Information AboutBank Run |
| CATEGORIES ABOUT BANK RUN | |
| banking | |
| financial crises | |
| economic problems | |
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A bank run (also known as a '''run on the banks''') is a type of Financial Crisis . It is a Panic which occurs when a large number of customers of a Bank fear it is Insolvent and withdraw their Deposit s. A ''run on the bank'' begins when the public begins to suspect that a bank may become s. As a result, no bank has enough Reserves on hand to cope with everyone taking their savings out at once. As a result, the bank faces Bankruptcy , and will 'call in' the loans it has offered. This can cause the bank's debtors to face bankruptcy themselves, if the loan is invested in a plant or other items that cannot easily be sold. If many or most banks suffer runs at the same time, then the resulting chain of bankruptcies can cause a long Economic Recession . As a bank run progresses, it generates its own momentum. As more people withdraw their savings, the likelihood of default increases, so other individuals have more incentive to withdraw their own deposits. For this reason, a ''bank run'' has much in common with the reflexive processes described by George Soros , amongst others. Another example of a reflexive process is Economic Bubble . HISTORY |
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