BANKING AFFAIRS

Detailed explanation-1: -What is a Bank Run? A bank run occurs when a bank or other financial institution runs out of funds due to depositors withdrawing all of their money for fear of losing it. Investors do so if they learn about the banks’ struggle to stay afloat in the market and their increased possibilities of going bankrupt.

Detailed explanation-2: -A bank run occurs when large groups of depositors withdraw their money from banks simultaneously based on fears that the institution will become insolvent. With more people withdrawing money, banks will use up their cash reserves and ultimately end up defaulting.

Detailed explanation-3: -A bank fails when it can’t meet its financial obligations to creditors and depositors. This could occur because the bank in question has become insolvent, or because it no longer has enough liquid assets to fulfill its payment obligations.

Detailed explanation-4: -A run on a bank occurs when a large number of depositors, fearing that their bank will be unable to repay their deposits in full and on time, simultaneously try to withdraw their funds immediately.

Detailed explanation-5: -Demand deposits are deposits which can be withdrawn by the depositor at any time by means of a cheque.