Bank Run

When many depositors withdraw their money from a bank at once, fearing it will fail.

A bank run happens when depositors lose confidence in a bank and rush to withdraw their funds simultaneously. Because banks lend out most deposits rather than holding them in cash, even a healthy bank can't pay everyone at once — so the panic itself can cause the failure the depositors feared. Deposit insurance like the FDIC exists largely to prevent runs by removing the reason to panic. The 2023 collapse of Silicon Valley Bank showed runs can now happen in hours, not days, when withdrawals move at smartphone speed.

Rumors about the bank's losses triggered a bank run, with depositors pulling billions in a single day.