We Rarely See Bank Runs Since the Advent of Federal

question 42

Essay

We rarely see bank runs since the advent of Federal deposit insurance, but runs on life insurers and mutual funds do occur even though claimants have pro rata claims in the event of default. Why do these runs still occur?

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Definitions:

Expensive Substitutes

Expensive substitutes are alternative products or services that are more costly than the original item they replace, often affecting consumer choices.

Brand Names

Labels that distinguish the goods or services of one seller from another seller.

Generic Items

Products that are marketed without a brand name and are typically lower in price than branded equivalents.

Monopolistically Competitive

Describes a market structure where many firms sell products or services that are similar but not identical, allowing for some degree of market power.