Bank Run
Historically, in a run on the bank or bank run, a widespread rumour that a retail banking institution lacks the liquidity to pay all of its depositors causes large numbers of clients to all attempt to withdraw their funds at once out of fear of losing everything. As banking is based on a fractional reserve system, where an institution holds only a small percentage of its assets under management in cash in order to lend or invest the rest, the rumour that starts the bank run effectively becomes a Self-Fulfilling Prophecy – even if the institution was originally stable, enough clients frantically withdrawing everything at once will break the bank. This was very common during the Great Depression of the 1930s, but there are certainly more recent examples, such as the 2007 collapse of the Northern Rock at the beginning of the Great Recession.
In fiction, a government bank inspector can usually be counted upon to show up at the worst possible moment, forcing the directors of the failing bank to explain the lack of funds – or even threaten the management with prison time by claiming the problems were caused by embezzlement of the bank's funds by insiders. In fiction, it also takes little more than the tiniest whispered rumour to provoke a full-scale run on a local bank.
In practice, governments today usually step in rapidly to provide deposit insurance or lend money to keep a failing institution able to meet obligations until it can be quietly merged into another, more solvent firm. This is nominally intended to prevent insolvency at one firm from escalating to drag counterparties into bankruptcy, breaking the system as a whole.
That doesn't mean that bank runs can't still happen in Real Life, and it certainly doesn't prevent them from being a recurring trope in fiction. The long line of panicked depositors snaking out of the bank and around the block creates dramatic tension which renders the underlying complex financial concepts simple and black-and-white in an easily understandable form.
Fan Works
- Runs on Gringotts are occasionally seen in Harry Potter fan fiction, often because of some action of Harry's triggers them, either deliberately or accidentally. A couple examples:
- In Wizards Fall: Rescuing the Rescuer by Bobmin356, Harry recalls how, because the goblins had aligned themselves with Voldemort, he closed out his (very large and substantial) Gringotts account immediately after defeating the Dark Lord. When word about it leaked out it triggered a run on the bank that resulted in Gringotts failing, the goblins retreating underground and sealing themselves off, and the Ministry taking over the bank.
- In chapter 9 of Exodus by "Nigelcat1", a run on Gringotts begins when the violation of several treaties with Muggle Britain result in the impending deportation of the Wizarding population.
Film
- American Madness (1932): In this Frank Capra film, Dickson's bank is robbed of $100,000 (nearly $2 million in 2019 dollars) in the Great Depression era. Word of the robbery causes a run on the bank, but friends of the banker come to his aid.
- It's a Wonderful Life (1946): The Bailey Building and Loan becomes a target, largely for the benefit of an unethical competitor, after $8000 goes missing. Not as massive a sum as in American Madness, perhaps (it's about $106,000 in 2019 dollars) but still substantial.
- Mary Poppins (1964): Mary Poppins manipulates Mr. Banks into taking the children to his workplace, the Fidelity Fiduciary Bank, where Mr. Dawes aggressively urges Michael to invest his tuppence in the bank. Dawes ultimately snatches the coins from him. Michael demands them back; other clients overhear the conflict and all begin demanding their own money back, causing a bank run.
- The Pope Must Die (1991): Newly-appointed Pope David I learns the Vatican Bank is a tool of the Mafia and has it dissolved, in a dramatic scene mimicking Jesus' overturning the moneychangers' tables in the Temple.
Literature
- The Jungle by Upton Sinclair: A run on a bank is one of many causes of the characters' suffering.
- The Moneychangers by Arthur Hailey includes a potentially fatal run on a fictional US bank, as well as a trusted employee being caught for embezzlement.
Live-Action TV
- Noble House (1988) is based on a novel in which international trading company Struan's, a noble house which was reputable for years, is in trouble after being overextended by the previous management. While the novel and the TV mini-series differ, the object in both is to have the troubled institution bailed out by a larger bank.
Theatre
- The War of Wealth (1896, Broadway melodrama) depicts a 19th-century bank run in the USA.
- Panic (Archibald MacLeish, 1935) depicts the bank panic of 1933.
Western Animation
- Fly Tales: The fly is sometimes shown as a variation of a Blithe Spirit where the "shaking things up" part occurs due to the fly's own complete obliviousness and obsessive focus on getting something regardless of consequences. For instance, causing a Bank Run for the sake of getting a chocolate coin in "The Chocolate Coin".