Investor Glossary-run on the bankInvestor Glossary-run on the bankInvestor Glossary-run on the bankInvestor Glossary-run on the bankInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Run On The Bank

The HTML to link to this page
 

A run on the bank occurs when customers/institutions panic and worry that their bank will go bankrupt, losing the funds they deposited. In a run on the bank situation, many customers will withdraw their savings, all within a very narrow time frame (i.e. a few days). Although at the beginning of a run on the bank, the bank may not have been insolvent, a run on the bank can precipitate the bank into bankruptcy. Indeed, as the run on the bank propagates with more and more customers/institutions losing confidence, at some point, the bank reserve is not able to meet all withdrawals requests and therefore, the bank becomes insolvent. During the great depression, a national run on the bank was characterized by customers physically lining up at their bank to withdraw their savings. With the availability of online transactions, a run on the bank can start with customers/institutions transferring funds to other banks or financial institutions they believe are less likely to default. Such run on the bank is called a silent run on the bank. A run on the bank can be mitigated by certain government actions (i.e. increase of FDIC deposit insurance limits, re-regulation of banks, increased reserve requirements, monetary bailout). A run on the bank is also called a bank run.



Rate this Run On The Bank definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, balance sheet, VIX, implied volatility, current ratio, reverse mortgage, risk management, minority interest, option premium, inflation, EBITDA, average price per share, ex-dividend date, annual return, 144a, wholly-owned subsidiary, irrevocable trust, Key Rate Duration, APR, stock split, debt service coverage, deferred tax, 1031 exchange, LIBOR, real GDP, Zero Cost Collar, liquidity ratio, 1035 exchange, FTSE, phantom income, covered put, in escrow, stock market close, per diem, margin rate, open position, quality assurance, dividends payable, deferred revenue, required rate of return, FICO score, retained earnings, diluted share, 401a, class C shares, ex-dividend, command economy, limit order, cancelled check


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use