A "run on the banks" refers to a situation in which a large number of depositors, concerned about the stability or solvency of a financial institution, simultaneously withdraw their funds from their accounts. This massive withdrawal of funds can lead to a severe liquidity crisis for the bank, making it difficult or impossible to meet the demands of all the depositors.

During a bank run, there might be panic and loss of confidence in the institution, causing a self-fulfilling prophecy where more depositors rush to withdraw their funds, exacerbating the financial strain on the bank. Bank runs can have significant consequences on the financial system, leading to a domino effect on other banks and potentially triggering broader economic instability.

Drawing on a study by Jiang, Matvos, Pisorski, & Seru, the following characteristics of a bank run can be understood in terms of six dimensions:

1. Marked-to-Market Losses: The article examines losses on banks' assets, including loan portfolios and securities linked to real estate, by adjusting them to their market values. Findings indicate that bank assets decline on average by 10%, with some banks experiencing a decline of up to 20%.

2. Impact on Bank Solvency and Run Incentives: The decline in assets affects banks' solvency and run incentives. Banks with higher reliance on uninsured deposits are more susceptible to runs by depositors. Uninsured depositors have incentives to withdraw their funds if they believe the bank's assets have significantly decreased in value.

3. Uninsured Leverage and Bank Fragility: Uninsured leverage (Uninsured Debt/Assets) is a key factor in determining a bank's potential insolvency. Banks with lower initial capitalization and higher uninsured leverage are more fragile and vulnerable to runs by uninsured depositors.

4. Impact of Interest Rate Increases: A rise in interest rates can exacerbate the vulnerability of banks to depositor runs. If interest rate increases are substantial, there is a possibility of a "bad" equilibrium with uninsured depositor runs leading to banks becoming insolvent.

5. Implications for Financial Stability: The decline in bank asset values and a large share of uninsured deposits at some U.S. banks can impair their stability. Even if only a portion of uninsured depositors withdraw their funds, numerous banks are at potential risk, affecting insured depositors as well.

6. Increased Fragility of U.S. Banking System: The calculations suggest that recent declines in bank asset values significantly increased the fragility of the U.S. banking system to uninsured depositor runs.

After extensive analysis, their conclusion is that “Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to even insured depositors, with potentially more than $250 billion of insured deposits at risk absent regulatory intervention.”