Bank runs: Why they are increasingly dynamic and what banks can do about it

The unusual accumulation of bank runs in spring 2023 has highlighted how vulnerable the business model of deposit banks is. The digital transformation has a significant impact on the course of bank runs: discussions on social networks can cause massive deposit outflows in a short time. Because information and rumours spread ever faster and everyone who invests money can withdraw it at the click of a mouse, banks are confronted with a new dynamic.

We took this as an opportunity to take a close look at the bank run phenomenon and the specifics of recent cases. Because even a perfectly healthy institution is not immune to a bank run - what matters is what depositors believe and whether they have confidence in the safety of their deposits.

In a new white paper, Matthias Mayer and Daniel Sommer analyse the background of the recent bank runs. They wanted to know:

• What drives bank runs?
• Why have bank runs been so fast and dynamic in 2023?
• What significance do banks' business models and their risk management have for the emergence and course of bank runs?
• What role do banking supervision, deposit insurance and the resolution regime play in this context?

With 10 clear recommendations for action, the authors translate their findings into practical bank management and address above all the further development of communication, strategy and risk management.