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Feb 01, 2024
By: Bhumi Shrivastava
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They typically stem from panic rather than actual insolvency, but can push a bank into bankruptcy.
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Banks have daily vault limits and reserve strategies, often holding funds at central banks to mitigate risks.
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Banks may sell assets at lower prices to meet withdrawal demands, causing customer concerns.
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Notable bank runs include those during the Great Depression and more recent ones on Silicon Valley Bank, WaMu, and Wachovia Bank.
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Bank runs can have a domino effect on the economy, as witnessed in the Great Depression.
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Regulatory measures such as interest on reserve balances aim to incentivize banks to keep funds in reserve, reducing the likelihood of bank runs.
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