Bank run

A bank run is a series of unexpected large cash withdrawals from a bank 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 runs are a risk for every bank that operates under a fractional-reserve banking system.

Sources

http://usinfo.state.gov/products/pubs/oecon/chap12.htm

See also

• Financial Crisis of 2008
• Great Depression
• Panic of 1837
• Panic of 1893
• Panic of 1907
• Recession