Authors: Sergio Correia, Stephan Luck, and Emil Verner
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Staff Reports
Bank Runs With and Without Bank Failure
Number 1198
July 2026
July 2026
JEL classification: G01, G21
We study the causes and consequences of bank runs. By applying large language models to historical newspapers, we create a comprehensive database of bank runs in U.S. history with information on 3,984 runs on individual banks from 1863 to 1934. Our novel data allow us to establish that runs are considerably more likely in weak banks but also occur in strong banks, especially in response to negative news about the real economy or the broader banking system. However, runs typically only result in failure for banks with poor fundamentals. Strong banks survive runs through various mechanisms, including signaling strength, interbank cooperation, and temporary suspension. At the local level, runs on banks with poor fundamentals translate into substantially larger declines in deposits, lending, and manufacturing activity than runs on strong banks. Our findings imply that poor fundamentals are central to explaining both when runs occur and when they have severe economic effects, tempering the view that small shocks can generate discontinuous jumps to bad equilibria through self-fulfilling run dynamics.
Author Disclosure Statement(s)
Sergio Correia
I declare that I have no relevant or material financial interests that relate to the research described in the paper “Bank Runs With and Without Bank Failure.”
Stephan Luck
I have nothing to disclose.
Emil Verner
The author declares that he has no relevant or material financial interests that relate to the research described in this blog post.
I declare that I have no relevant or material financial interests that relate to the research described in the paper “Bank Runs With and Without Bank Failure.”
Stephan Luck
I have nothing to disclose.
Emil Verner
The author declares that he has no relevant or material financial interests that relate to the research described in this blog post.
Suggested Citation:
Correia, Sergio, Stephan Luck, and Emil Verner. 2026. “Bank Runs With and Without Bank Failure.” Federal Reserve Bank of New York Staff Reports, no. 1198, July. https://doi.org/10.59576/sr.1198
Correia, Sergio, Stephan Luck, and Emil Verner. 2026. “Bank Runs With and Without Bank Failure.” Federal Reserve Bank of New York Staff Reports, no. 1198, July. https://doi.org/10.59576/sr.1198
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