A bank run is...
A)A portable bank service that is convenient for customers to deposit or withdraw their money.
B)A situation when a bank lends out a lot to customers.
C)A situation when a large number of customers withdraw their deposits because they believe the bank might be or is insolvent.
D)A situation when a big bank splits into different smaller banks.

Question

Quizplus · Accepted Answer

A bank run is an initial phase for bankruptcy if it is not prevented. As more people withdraw their deposits, the likelihood of default increases and this encourages further withdrawals. This can destabilize the bank to the point where it faces bankruptcy. If many banks suffer runs at the same time, it leads to the financial crisis of bank panic.

A Bank Run Is