A bank run occurs when depositors lose confidence in a bank and begin withdrawing their deposits en masse, often leading to a liquidity crisis for the bank. The bank may not have enough cash on hand to meet the demands of all the depositors, leading to a potential collapse of the institution.

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A Bank Run Involves

Question 31

Multiple Choice

A bank run involves

A) a failure by a bank to get the maximum return on its investments.
B) large numbers of depositors withdrawing their deposits within a short period of time.
C) a bank being forced out of business.
D) fraud on the part of a bank's managers.

Correct Answer: