What is a bank run?
A bank run does not need the bank to be failing. It only needs enough people to believe it might be.
Banks hold only a fraction of deposits as cash. If everyone asks at once, the maths does not work.
The design that makes it possible
Your deposit does not sit in a drawer. It is lent out, mostly for long periods: mortgages, business loans, bonds.
So a bank is structurally mismatched on purpose. It owes money that can be demanded today, and holds assets that take years to return. This is called maturity transformation and it is the entire economic function of a bank. It works because on any ordinary day only a small fraction of depositors want their money.
The system runs on the assumption that everyone will not ask at once. That assumption holds almost always, and its failure mode is total.
Solvent and illiquid are different things
This is the distinction that makes bank runs feel unfair, and it is real.
A bank can be solvent, meaning its assets exceed what it owes, and still fail, because those assets cannot be turned into cash today. Selling long-dated bonds in a hurry means selling at a loss, which turns a liquidity problem into a solvency problem while everyone watches.
That is the loop. Fear causes withdrawals, withdrawals force fire sales, fire sales cause real losses, real losses justify the fear. The belief manufactures its own evidence.
What changed, and what did not
Deposit insurance was invented precisely to break the loop. If your money is guaranteed, you have no reason to queue, and the run does not start. For insured retail depositors this works extraordinarily well.
What 2023 demonstrated is that the mechanism still has an exposed edge. Uninsured deposits, especially concentrated business balances, still have every reason to move first. And the queue is no longer a physical one. Coordination that once took days now takes an afternoon, because everyone is in the same group chats, watching the same feeds, using the same apps.
The speed changed. The mechanics are identical to 1907.
Everyone in a theatre deciding at the same moment to leave through one door. The building is not on fire. The door is the problem, and the crush is caused entirely by everyone else having the same reasonable thought.
Where you meet it
Every deposit insurance limit, every business that suddenly split its balances across three banks, and every panic that felt irrational until you understood the arithmetic.