A bank run occurs when a large number of depositors withdraw their funds simultaneously due to fears that their bank is insolvent or on the verge of collapse. This mass withdrawal can become a self-fulfilling prophecy, as the bank may not have enough liquid assets to cover all the withdrawals, leading to its eventual failure. This article provides an overview of the history of bank runs, examining their causes, effects, and the measures taken to prevent or mitigate them.
Early Instances of Bank Runs
One of the earliest recorded instances of a bank run dates back to 1343, when the Florentine banking house of Bardi failed due to the default of a significant debtor, the English Crown. This event led to a wave of panic among depositors, who rushed to withdraw their funds.