Bank Run 2020-04-18 08:00:00

Bank Run

A bank run is created when customers begin withdrawing their money en masse because they believe the bank will fail (i.e., become insolvent). After customers begin withdrawing their money in a panic, it causes more customers to withdraw money. If enough customers withdraw their money, the bank will default. Basically, the bank runs out of money. The FDIC was established in 1933 as a result of bank runs.

Bank runs are not as common in modern times because many customers know that their deposits are insured by the FDIC. This doesn’t mean a bank run can’t occur. Banks don’t keep all of their customer deposits on-site. For security reasons and regulations from the Federal Reserve, only a small percentage of actual deposits are kept in the bank.

 


Download The Guidebook To IPWM

Another Way To Own Investment Properties

Learn More About How Investment Property Wealth Management works.

Another Way To Own Investment Properties

Download The Guidebook To IPWM Investment Property Wealth Management®
Download eBook