Historical research indicates people did not run on banks out of fear of other people running, but typically ran only when a bank was already insolvent, so runs served a healthy purpose of closing failing banks before they lost even more money, and provided a useful incentive for depositors to monitor their own banks rather than relying on others.

factualpending

Speaker

Larry White

Evidence Quote

people typically ran when the bank was already insolvent and so it actually served a healthy purpose of closing the bank before it lost even more money

Source

Larry White on Hayek and Money 02/01/2010EconTalk
Created: 6/17/2026, 10:31:20 AM

My Notes

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