The term Bank Run usually describes an event wherein many depositors simultaneously withdraw their money immediately for fear that the bank is no longer capable of paying off their accounts in full and in the proper time. The problem exists because banks do not normally keep huge portions of the money on hand and are usually invested in form of lending and interest bearing assets that allows them to cover interests on depositor’s accounts.
As a Bank Manager or Bank Owner, the key to overcoming a Bank Run is to be able to efficiently and quickly generate liquid assets that can respond to the depositor’s needs. Being able to accomplish this can also translate into a renewed confidence from other investors and stop the Bank Run. That is why part of a Bank Manager’s responsibility is to ensure continued confidence from depositors and investors to their institution. Banking institutions that are hit with Bank Runs are usually those with problems of solvency.
