Bank Run

A bank run occurs when clients try to withdraw their money because they are concerned about the bank’s stability and they worry the bank may cease to function in the near future. This usually happens when depositors realize that their money is deposited in a bank that is heavily burdened with bad debts, when a credit rating agency downgrades a bank’s creditworthiness, or when it is rumored that the bank is about to go bankrupt.
However, with more and more withdrawal requests from people, their fear became a self-fulfilling prophecy, because bank reserves often did not have enough cash to cover sudden and large withdrawals. Ultimately, this could bring banks closer to bankruptcy and increase the likelihood of default.