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what is “bank run” and how does it cause bank failure?

what is “bank run” and how does it cause bank failure?
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Answer #1

In bank run, most deposit holders simultaneously start withdrawing their deposits from the bank because of rumors such as the bank does not have enough money.

A bank keeps only a fraction of its deposits as reserves, when many deposit holders start withdrawing their money, the bank may fail to meet their demand because of liquidity problem. This might lead to bank failures.

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