What is a Run on the Bank ?

To understand why a bank failure occurs, it is important to first understand how banks work. Banks are financial institutions that accept deposits from customers and use those deposits to make loans and investments. Banks make money by charging interest on loans and investments, and they pay interest to customers who deposit money in their accounts.

When a bank fails, it means that it is unable to meet its financial obligations. This can happen for a variety of reasons, including poor management, bad investments, or an economic downturn. 

The failure of a bank can have serious consequences for the economy. When a bank fails, customers may lose their deposits and investors may lose their money. This can lead to a loss of confidence in the financial system, which can cause people to withdraw their money from other banks. When this happens,  sometimes banks don’t have enough reserves or liquid assets to get people their money. This often creates a domino effect, leading to more bank failures and a recession.

In order to prevent bank failures, governments around the world have established regulations and safeguards. For example, many countries require banks to hold a certain amount of capital in reserve to protect against losses. Banks are also required to undergo regular audits and financial stress tests to ensure that they are financially stable.

As individuals, it's important to be aware of the risks associated with investing and to make informed decisions about where to deposit our money, but also to have faith in the economy and not panic as the economy expands and contracts.