ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A bank run occurs when many customers withdraw all their money simultaneously from their deposit accounts with a banking institution for fear that the institution is, or might become, insolvent.

Detailed explanation-2: -A bank run occurs when a large number of customers of a bank or other financial institution withdraw their deposits simultaneously over concerns of the bank’s solvency. As more people withdraw their funds, the probability of default increases, prompting more people to withdraw their deposits.

Detailed explanation-3: -Washington Mutual and Wachovia are two famous examples of bank runs at this time. Washington Mutual was the largest bank failure in U.S. history. The trouble began when it was revealed that the bank had been lent large sums of money by Freddie Mac and Fannie Mae.

Detailed explanation-4: -If you’re wondering what is the difference between a deposit and a withdrawal, the truth is that they are exact opposites: A deposit is money put into a bank account for safekeeping until you need it. A withdrawal is money that’s taken out of your account.

Detailed explanation-5: -August 1931–January 1933. Bank panics in 1930 and 1931 were regional in nature, but the financial crisis spread throughout the entire nation starting in the fall of 1931. The banking panics in 1930 and early 1931 were regional in nature.