Glossary - ChicksX

Bank Run is when many customers withdraw deposits simultaneously, fearing the bank's collapse or insolvency.

Bank Run is when a large number of customers withdraw their deposits from a bank at the same time. This often happens due to concerns about the bank's financial stability. The sudden outflow of cash can exacerbate the bank's problems, potentially leading to insolvency. Banks typically do not keep enough liquid assets to cover all deposits, relying instead on customer confidence. A bank run can destabilize the financial system, prompting intervention by central banks or governments. Understanding this helps in grasping the importance of trust in financial institutions and regulatory oversight.