Banking Crisis: What is a Bank Run, Contagion, and Credit Risk?
The fallout from Silicon Valley Bank (SVB) has driven up global credit risk as investors start to worry about which other banks might have trouble staying afloat. If enough customers believe their bank is about to fail, a stampede can ensue as everyone tries to withdraw their money at the same time. Banks don’t hold enough cash to cover all their clients’ deposits, which is why a bank run can turn the fear of insolvency into the real thing. A bank run was a major factor behind the recent failure of Silicon Valley Bank (SVB). Watch the video to learn more about what is a bank run, contagion, and credit risk.
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