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Which of the following with regard to the term bank run’ is correct?
1) The net balance of money a bank has in its chest at the end of the day
2) The ratio of bank
3) A panic situation when the deposit holders start withdrawing cash from the banks
4) The period in which a bank creates highest credit in the market
A panic situation when deposit holders start withdrawing cash from the banks Bank runs happen when a large number of people start making withdrawals from banks because they fear the institutions will run out of money. Hence, Option 3 is correct.
A bank run is typically the result of panic rather than true insolvency.
A bank run triggered by fear that pushes a bank into actual insolvency represents a classic example of a self-fulfilling prophecy.
3) A panic situation when the deposit holders start withdrawing cash from the banks