Difference between revisions of "Bank run"
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| − | A series of unexpected 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. | + | 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.<ref>Mankiw, N.G. [https://books.google.com/books?id=58KxPNa0hF4C&lpg=PA353&dq=bank%20run%20fractional-reserve%20banking&pg=PA353#v=onepage&q=%22bank%20runs%20are%20a%20problem%20for%20banks%20under%20fractional-reserve%20banking%22&f=false ''Principles of Macroeconomics'']; South-Western Cengage Learning; Mason, OH. Page 353, (2008)</ref><ref>http://usinfo.state.gov/products/pubs/oecon/chap12.htm</ref> |
| − | == | + | ==References== |
| − | + | {{reflist}} | |
| − | [[Category: | + | ==See also== |
| + | |||
| + | * [[Financial Crisis of 2008]] | ||
| + | * [[Great Depression]] | ||
| + | * [[Panic of 1837]] | ||
| + | * [[Panic of 1893]] | ||
| + | * [[Panic of 1907]] | ||
| + | * [[Recession]] | ||
| + | |||
| + | {{Economic preparedness topics}} | ||
| + | |||
| + | [[Category:Economic Preparedness]] | ||
| + | |||
| + | [[Category:Business]] | ||
| + | [[Category:Economic History]] | ||
Latest revision as of 13:41, September 26, 2018
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.[1][2]
References
- ↑ Mankiw, N.G. Principles of Macroeconomics; South-Western Cengage Learning; Mason, OH. Page 353, (2008)
- ↑ http://usinfo.state.gov/products/pubs/oecon/chap12.htm
See also
