In the event of a bank run, do people eventually get their money back? If not, why not?

Question

I understand why banks cannot pay people back in the moment, but wouldn’t they still owe their depositors their money when they eventually DO get the money back presumably once the recession is over?

This is all assuming the bank does not permanently go bankrupt of course. I understand that some banks may just never recover and close their doors for good.

In: 46

Answer 1

The logic of a bank run is the fear that the bank is on the verge of bankruptcy, so you need to withdraw your money before that happens. They were greatly diminished in the US by the creation of the FDIC, which guarantees a payout for depositors if a bank is insolvent.