What it is
A bank run is the term for when a large number of a bank’s depositors pull their money out within a certain period.
This usually causes trouble for the institution, since banks lend money to other customers in the form of loans in order to earn. So, if the bank’s reserves are less than the total amount being withdrawn by the depositors, it will have to find a way to come up with the rest of the cash.
There isn’t one specific reason for a bank run, although the causes all lead to a loss of confidence in the institution’s ability to give its depositors their money back.
What it means for you
If there’s an ongoing bank run, it may be a cause of concern for you. That’s because this type of event tends to cause worry and fear across the entire industry, and so you might see the effects even if your money is in a different bank.
Remember also that many other industries are connected to banking, and they may end up being affected to a certain degree as well.
However, this doesn’t mean that you should automatically panic and pull your money out. After all, your money is covered to a certain amount by the Philippine Deposit Insurance Corporation or PDIC. Instead, observe the situation and listen to what the experts are saying before making your decision.
