A run usually occurs when investors lose confidence in financial institutions or markets, and they will try to withdraw their funds as soon as possible. This kind of behavior will lead to the accelerated loss of funds in institutions or markets, and then form a vicious circle, leading to the collapse of institutions or markets.
A common phenomenon of bank run
Run is a common phenomenon in financial markets, and its manifestations are as follows:
1. Run: When a large number of depositors withdraw funds from the bank at the same time, the liquidity of the bank's funds is not enough to meet the withdrawal demand, leading to bank bankruptcy.
2. Stock run: A large number of investors sell a stock at the same time, and the stock price plummets, which leads to the company's stock price falling, which in turn leads to panic selling in the stock market.
3. Currency run: When a large number of investors convert their funds into other currencies at the same time, it will lead to a decrease in the domestic money supply and a decline in the value of money, which will lead to inflation.
The influence of running
The bank run has a very serious impact on the financial market, and its main effects are as follows:
1. Accelerate the bankruptcy of institutions or markets: A run will accelerate the capital loss of institutions or markets and fail to meet the capital demand, thus accelerating their bankruptcy or market collapse.
2. Increase investors' losses: A run will cause investors to sell assets and the stock price will plummet, thus increasing investors' losses.
3. Affect the stability of the whole financial market: A run will trigger market panic, and then affect the stability of the whole financial market.
How to deal with running?
Faced with a run, financial institutions and the government can take the following measures:
1. Strengthen supervision: Strengthen supervision of financial institutions to guard against their risks, so as to avoid the occurrence of bank runs.
2. Improve market transparency: Improve market transparency, let investors know the market situation more clearly, reduce market fluctuations and avoid panic selling by investors.
3. Strengthen crisis management: Strengthen crisis management and take timely measures to deal with bank runs to avoid excessive impact on the entire financial market.