If all depositors withdraw their money at the same time, what is this situation called?

Bank charge

Liquidity crisis

Financial ruin

Deposit run

Reviewed & Verified by Edzy Expert

Sandeep Chaturvedi

CBSE Social Science & Humanities Reviewer

Social science and humanities educator with 14+ years of experience reviewing CBSE SST, economics, commerce, arts, and vocational content.

Answer and Solution

D. Deposit run

This phenomenon is known as a 'deposit run,' leading to banks facing liquidity issues as they do not keep all deposits as cash.

Watch Video Solution

Keep Practising

Students who asked this also explored

Continue with nearby questions to strengthen the same chapter concept while you still have the context fresh in mind.

What is a potential consequence for a bank if it has a low reserve ratio?

When taking a loan, what factor is most likely considered by banks to assess repayment capability?

Why do banks often charge higher interest rates for loans compared to the interest paid on deposits?

What is the general reason banks require collateral for loans?