List of Bank Runs in Economic Crisis

Bank runs have a long and storied history, with some of the most notable instances occurring during economic crises. The 1930s saw a massive bank run in the United States, with over 9,000 banks failing between 1929 and 1933.

The Great Depression was a major catalyst for this bank run, as people lost confidence in the banking system and rushed to withdraw their deposits. This led to a devastating chain reaction, as banks were unable to meet the sudden demand for cash.

One notable example of a bank run during this time was the collapse of the Bank of United States in 1930. The bank's failure led to a loss of over $70 million in deposits, a staggering amount at the time.

The bank run of 1930 was a wake-up call for the US government, which responded by establishing the Federal Deposit Insurance Corporation (FDIC) in 1933. The FDIC was designed to insure deposits up to $2,500, providing a safety net for bank customers and restoring confidence in the banking system.

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Bank runs have been a recurring phenomenon throughout history, causing widespread panic and financial devastation. One of the earliest recorded bank runs occurred in 1866, when Overend, Gurney and Company suffered a bank run due to poor railway stock prices.

The Panic of 1893 saw many bank runs occur, leaving depositors in a state of panic. The contagion of bank runs quickly spread, as people rushed to withdraw their funds from other banks.

The stock market crash of 1929 led to a massive wave of bank failures, with about 9,000 banks failing throughout the 1930s. Bank runs continued across the country throughout the following two years, with the first run occurring in Nashville, Tennessee.

The Second Bank of the United States was heavily impacted by the economic turmoil, leading to a reduction in credit to state-chartered banks. This resulted in the collapse of many state-chartered banks.

A single large bank failure can have a ripple effect, spurring bank runs across the country. This was the case in 1873, when Jay Cooke & Company declared bankruptcy, causing depositors to panic and rush to withdraw their funds from other banks.

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Here's a brief timeline of notable bank runs:

Economic turmoil can lead to bank runs and failures. The Second Bank of the United States was heavily impacted by this crisis, causing it to reduce credit to state-chartered banks.

This led to a chain reaction, with state-chartered banks collapsing one by one. Without the flow of funds from the Second Bank, they couldn't stay afloat.

A single large bank failure can also spark bank runs. Jay Cooke & Company, one of the largest banks in New York City, declared bankruptcy in September 1873.

This triggered a panic among depositors, who rushed to withdraw their funds from other banks. The failure of Jay Cooke & Company was the final straw that led to widespread bank runs.

A systemic crisis can have far-reaching consequences, as seen in the past. Over 100 bank failures led to a string of bank runs, fueled by fear and economic worries.

The crisis was so severe that the New York Stock Exchange suspended trading for the first time in history. This was a major disruption to the financial system.

In the absence of government protection, many Americans lost everything due to bank failures. Without a safety net, depositors were left vulnerable to the risks of bank failure.

The Second Bank of the United States, heavily impacted by the crisis, reduced credit to state-chartered banks, leading to their collapse. This further exacerbated the crisis.

Risky decisions by bank leaders, such as Heinze and Morse, undermined trust in their institutions, leading to bank runs and failures. Their failure spread quickly, and depositors rapidly withdrew their funds.

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Economic turmoil has led to bank failures throughout history. One such instance was during the Second Bank of the United States crisis, where the bank began reducing credit to state-chartered banks, causing them to collapse.

The Second Bank of the United States was heavily impacted and began reducing the credit it made available to state-chartered banks. This led to a wave of bank failures, causing economic turmoil.

In 1873, Jay Cooke & Company, one of the largest banks in New York City, declared bankruptcy after struggling to market railway bonds. This sparked a mass panic among depositors, leading to a series of bank runs.

The failure of Jay Cooke & Company led to a series of bank runs, where depositors rushed to withdraw their funds from other banks. This was a major contributor to the economic turmoil of the time.

The Second Wave of Bank Failures in 2023 saw the failure of First Republic Bank, which was the second-largest bank failure in American history. The FDIC facilitated the sale of the bank to J.P. Morgan Chase, ensuring that depositors' funds were preserved.

The FDIC's swift action in the Second Wave of Bank Failures ensured that depositors' funds were preserved, and no depositor lost any insured funds. This highlights the importance of government agencies in protecting depositors during times of economic turmoil.

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The Panic of 1837 was a major economic crisis that lasted until the mid-1840s, causing widespread bank failures. In fact, 343 out of 850 U.S. banks closed entirely, and many more were severely impacted.

The Panic of 1837 was caused by a combination of factors, including speculative lending practices, a sharp decline in cotton prices, and a land price bubble. Andrew Jackson's financial policies were also seen as a major contributing factor to the crisis.

The contagion from the bank runs of the Heinze banks spread to trust companies, causing further economic turmoil. This highlights the interconnectedness of the financial system and the potential for widespread economic disruption.

The failure of Knickerbocker Trust in 1907 was a major contributor to the economic turmoil of the time. The trust company was temporarily saved by a loan from the National Bank of Commerce, but ultimately failed due to the ongoing bank run.

Systemic techniques are designed to prevent banking crises from spreading across the entire economy. These techniques can be effective in preventing a bank run, but they may still allow individual institutions to fail.

Deposit insurance systems, like the U.S. FDIC, insure each depositor up to a certain amount, removing the incentive to withdraw deposits due to fear of bank failure. This system has been used to great effect in preventing bank runs, but it can be ineffective if the government itself is perceived to be running short of cash.

Bank capital requirements, such as those outlined in the Basel III agreement, can reduce the possibility of a bank becoming insolvent. This is because banks are required to hold a certain amount of capital, which acts as a buffer against losses.

Transparency is also key in preventing crises from spreading through the banking system. In the case of the 2007-2010 subprime mortgage crisis, the extreme complexity of certain types of assets made it difficult for market participants to assess which financial institutions would survive.

Central banks can act as a lender of last resort, guaranteeing that they will make short-term loans to banks to ensure they have enough liquidity to honor their deposits. This is a critical role, as it helps to prevent a bank run by providing banks with access to liquidity.

The existence of deposit insurance and the lender of last resort create moral hazard, as they reduce banks' incentive to avoid making risky loans. However, these measures are still widely used due to the benefits of collective prevention outweighing the costs of excessive risk-taking.

To deal with a banking panic when prevention has failed, governments or central banks may declare an emergency bank holiday or announce increased lines of credit, loans, or bailouts for vulnerable banks.

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The Knickerbocker crisis led to the formation of the Federal Reserve Bank, which still operates a discount window loan system today.

The New York Clearing House Committee's response to the crisis, issuing clearing-house loan certificates, was a precursor to the Federal Reserve's discount window loan system.

In the aftermath of the crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which included increased capital requirements and stress tests for banks.

These regulations were designed to protect bank customers by ensuring that banks who were "too big to fail" were well capitalized to weather the next crisis.

The Dodd-Frank Act's regulations have been loosened since their implementation, but they remain an important part of banking regulation.

Several techniques have been used to help prevent or mitigate bank runs, including the use of clearing-house loan certificates and the establishment of the Federal Reserve Bank's discount window loan system.

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Bank runs have been depicted in various forms of fiction, often highlighting the chaos and panic that can ensue.

Archibald MacLeish's 1935 play, Panic, is set during the 1933 bank panic.

Motion pictures like American Madness (1932) and It's a Wonderful Life (1946) also feature bank runs.

The 1948 film Silver River shows a bank run, as does the 1981 movie Rollover.

In contrast, Mary Poppins (1964) is set in 1910 London, but still features a bank run scene.

Noble House (1988) and The Pope Must Die (1991) also depict bank runs.

Literary works like Arthur Hailey's novel The Moneychangers include a potentially fatal run on a fictional American bank.

Upton Sinclair's The Jungle features a run on a bank as one of the causes of the characters' suffering.

In the TV show The Simpsons, Bart Simpson starts a whisper campaign at the Bank of Springfield to instigate a bank run in the episode "The PTA Disbands".

The episode spoofs It's a Wonderful Life, highlighting the humorous side of bank runs.

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The Savings and Loan crisis of the 1980s and 1990s was a significant banking issue that affected many people. The banking industry was fairly stable during the half century following the Great Depression.

Speculation and regulations that didn't match market conditions led to this crisis. This combination of factors spawned the Savings and Loan crisis, beginning in the 1980s.

Many farmers lost everything during the crisis, similar to those who lost their savings during the bank failures in the 1830s. The government's efforts to curtail the damage were not enough to prevent widespread losses.

The crisis led to several state-chartered bank failures, much like the bank failures that occurred during the crisis in the 1830s. This ultimately paved the way for changes in the banking industry.

Bank runs can be a stressful experience for everyone involved. Several techniques have been used to help prevent or mitigate bank runs.

One of these techniques is to increase transparency and communication between banks and their depositors. This can help to alleviate fears and uncertainty that might lead to a bank run.

Implementing deposit insurance is another effective way to prevent bank runs. This ensures that depositors' funds are protected, even if the bank fails.

Regulatory oversight can also play a crucial role in preventing bank runs. Authorities can monitor banks' financial health and take action if they notice any signs of instability.

In some cases, banks have been able to mitigate the effects of a bank run by implementing emergency measures. This might include limiting withdrawals or providing temporary loans to help stabilize the bank's finances.

Bank runs have occurred throughout history, and here's a brief timeline of some notable events:

In the 1990s, Banesto in Spain faced a severe bank run in 1994, with clients rushing to withdraw their money, exposing a €2.7 billion equity hole in the bank's finances.

Between 1997 and 1999, MBf Finance Berhad in Malaysia experienced several bank runs, with over 17 billion Ringgit (approximately $4.49 billion) withdrawn from its 120 branches.

Here's a list of notable bank runs by decade:

The Panic of 1837 was a major financial crisis that began in the mid-1800s. It lasted until the mid-1840s, causing widespread economic hardship. A sharp decline in cotton prices contributed to the panic.

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Speculative lending practices in western states were another issue. The financial policies of Andrew Jackson are also considered a major contributing factor. Many Americans lost their life savings due to the crisis.

343 out of 850 U.S. banks closed entirely during this time. This meant that many people lost access to their money. 62 banks partially failed, and numerous state banks were severely stressed.

The 1930s were a tumultuous time for the global economy, and one of the most notable events of this era was the Great Depression. This period saw widespread bank runs across the United States.

Many bank runs occurred during the Great Depression, but the exact causes and effects are still debated among historians.

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The 2020s were a tumultuous decade for the global banking system. A series of bank runs and shutdowns shook the world's financial markets.

One notable example is the Russian invasion of Ukraine, which led to a bank run on Sberbank's branch in the Czech Republic. On 25 February 2022, depositors withdrew their funds over fears of instability and in support of Ukraine, prompting the Czech National Bank to remove Sberbank's license and shut it down.

The Czech Financial Market Guarantee System's deposit insurance fund stepped in to guarantee refunds on deposits up to €100,000 per account. This move was backed by the full faith and credit of the government of the Czech Republic.

Another significant event was the sanctions against Russia, which led to a banking panic across multiple Russian banks. On 27 February 2022, the removal of Russian banks from the SWIFT system triggered a wave of withdrawals and instability in the Russian banking sector.

The largest bank run in history occurred in the United States, where a US$42 billion bank run on Silicon Valley Bank led to its closure by regulators. On 9 March 2023, the FDIC-insured deposits were assumed by the Deposit Insurance National Bank of Santa Clara.