When a Bank Run Moves at the Speed of a Notification
A bank can hold a valuable loan portfolio and still fail if too many depositors demand cash at the same time. That distinction between solvency and liquidity became more visible during the banking turmoil of 2023, when depositors could move money rapidly through digital channels. The Financial Stability Board reports that the fastest runs saw outflows of roughly 20–30 percent per day, while technology and social media made it easier for depositors to act quickly.
That makes the bank run more than a historical example. It is a live lesson in expectations, coordination, and financial stability. MobLab’s Bank Run game gives students a controlled environment in which to experience the mechanism before discussing why modern runs can unfold so quickly.
Start with the depositor’s decision
In the game, each player deposits $100. The bank lends the money in an investment that is stated to be repaid at maturity. In each period, players simultaneously decide whether to withdraw. The number of withdrawals is then announced to everyone.
The decision looks simple, but the payoff depends on what other players do. If the bank survives, patient depositors receive the stated return at maturity. If too many players withdraw, the bank must liquidate or borrow against the investment. The bank can honor only a limited number of withdrawals, determined by its liquidity setting. A player may withdraw because they expect others to withdraw—even when the underlying investment is sound.
This is the central insight: a run can be self-fulfilling. The fear of failure changes behavior, and the combined behavior can create the failure that depositors feared.
Connect the game to digital speed
After the first round, ask students to compare the game’s timeline with a mobile-banking timeline. In the classroom, students see the withdrawal count and then make another decision. In real life, a deposit can be moved in seconds, and a message shared online can reach many depositors before a bank has time to explain its position.
The comparison should not imply that the game models social media, mobile apps, or a complete banking system. Instead, it creates a useful extension: what happens when the same coordination problem has less time between signals and actions? Students can discuss whether faster information improves discipline or accelerates panic.
A productive debrief separates three questions:
Test a policy response
MobLab’s instructor guide includes a deposit-insurance treatment. Insurance returns a minimum percentage of a deposit after failure, which changes the cost of withdrawing early. Run a baseline treatment first, then repeat the game with partial insurance. Ask students to predict how insurance will affect withdrawals before they see the results.
The real-world policy discussion should be jurisdiction-specific. In the United States, the FDIC explains that eligible deposits are generally insured up to at least $250,000 per depositor, per ownership category, at each FDIC-insured bank. Stocks, bonds, mutual funds, crypto assets, and other non-deposit products are not covered by deposit insurance.
A five-minute writing prompt
End with this question: “If a bank’s assets are valuable but not immediately convertible to cash, what information or policy would make you wait?” Require students to use the terms liquidity, expectations, and coordination in their answers.
The Bank Run game is especially effective because it makes an invisible mechanism visible. Students do not merely hear that confidence matters. They watch individual choices combine into a system-wide outcome—and then test whether a policy changes the outcome.
Explore MobLab’s Bank Run game and bring financial stability theory to life in your classroom.
Sources: Financial Stability Board; Federal Deposit Insurance Corporation; MobLab Bank Run Instructor Guide.