Editing Bank run (section)

==Systemic banking crisis==
[[File:Bank Run in Michigan, USA, February 1933.jpg|thumb|Bank run during the [[Great Depression]] in the United States, February 1933]]

A bank run is the sudden withdrawal of deposits of just one bank. A ''banking panic'' or ''bank panic'' is a [[financial crisis]] that occurs when many banks suffer runs at the same time, as a [[cascading failure]]. In a ''systemic banking crisis'', all or almost all of the banking capital in a country is wiped out; this can result when regulators ignore [[systemic risk]]s and [[spillover effect]]s.<ref name=imf2008/>

Systemic banking crises are associated with substantial fiscal costs and large output losses. Frequently, emergency liquidity support and blanket guarantees have been used to contain these crises, not always successfully. Although fiscal tightening may help contain market pressures if a crisis is triggered by unsustainable fiscal policies, expansionary fiscal policies are typically used. In crises of liquidity and solvency, central banks can provide liquidity to support illiquid banks. Depositor protection can help restore confidence, although it tends to be costly and does not necessarily speed up economic recovery. Intervention is often delayed in the hope that recovery will occur, and this delay increases the stress on the economy.<ref name=imf2008>{{cite report |url=http://imf.org/external/pubs/ft/wp/2008/wp08224.pdf |access-date=29 September 2008 |last1=Laeven |first1=L. |last2=Valencia |first2=F. |title=Systemic banking crises: a new database |type=IMF Working Paper |version= IMF WP/08/224 |publisher=International Monetary Fund |year=2008}}</ref>

Some measures are more effective than others in containing economic fallout and restoring the banking system after a systemic crisis.<ref name=imf2008/><ref>{{cite journal |url=http://sapiens.revues.org/index747.html |last1=Lietaer |first1=B. |last2=Ulanowicz |first2=R. |last3=Goerner |first3=S. |year=2008 |title= Options for managing a systemic bank crisis |journal=S.A.P.I.EN.S |volume=1 |issue=2}}</ref> These include establishing the scale of the problem, targeted debt relief programs to distressed borrowers, corporate restructuring programs, recognizing bank losses, and adequately capitalizing banks.<!-- ref name=imf2008 --> Speed of intervention appears to be crucial; intervention is often delayed in the hope that insolvent banks will recover if given liquidity support and relaxation of regulations, and in the end this delay increases stress on the economy.<!-- ref name=imf2008 --> Programs that are targeted, that specify clear quantifiable rules that limit access to preferred assistance, and that contain meaningful standards for capital regulation, appear to be more successful.<!-- ref name=imf2008 --> According to IMF, government-owned asset management companies ([[bad bank]]s) are largely ineffective due to political constraints.<ref name=imf2008/>

A ''silent run'' occurs when the implicit fiscal deficit from a government's unbooked loss exposure{{clarify|date=August 2012}} to [[zombie bank]]s is large enough to deter depositors of those banks.<!-- ref name=Kane --> As more depositors and investors begin to doubt whether a government can support a country's banking system, the silent run on the system can gather steam, causing the zombie banks' funding costs to increase.<!-- ref name=Kane --> If a zombie bank sells some assets at market value, its remaining assets contain a larger fraction of unbooked losses; if it rolls over its liabilities at increased interest rates, it squeezes its profits along with the profits of healthier competitors.<!-- ref name=Kane --> The longer the silent run goes on, the more benefits are transferred from healthy banks and taxpayers to the zombie banks.<ref name=Kane>{{cite journal |title= Capital movements, banking insolvency, and silent runs in the Asian financial crisis |last=Kane |first=E. J. |journal=Pac-Basin Finance Journal |volume=8 |issue=2 |pages=153–175 |year=2000 |doi=10.1016/S0927-538X(00)00009-3|s2cid=261117418 |url= http://www.nber.org/papers/w7514.pdf }}</ref> The term is also used when many depositors in countries with deposit insurance draw down their balances below the limit for deposit insurance.<ref>{{cite news |last=Rothacker |first=Rick |url=http://www.charlotteobserver.com/597/story/246983.html |title=$5 billion withdrawn in one day in silent run |newspaper=[[The Charlotte Observer]] |date=2008-10-11 |archive-url=https://archive.today/20120723213502/http://www.charlotteobserver.com/597/story/246983.html |archive-date=2012-07-23 |access-date=2011-10-30 |url-status=dead }}</ref>

The cost of cleaning up after a crisis can be huge. In systemically important banking crises in the world from 1970 to 2007, the average net recapitalization cost to the government was 6% of [[GDP]], fiscal costs associated with crisis management averaged 13% of GDP (16% of GDP if expense recoveries are ignored), and economic output losses averaged about 20% of GDP during the first four years of the crisis.<ref name=imf2008/>