Professor Rahul Vashishtha explains why even healthy banks can collapse under panic withdrawals
On May 1, 2023, First Republic Bank was seized by the Federal Deposit Insurance Corporation (FDIC) and acquired by JPMorgan—the last of a string of three regional bank failures in less than two months.
However, many analysts pointed out substantial differences from the earlier failures of Silicon Valley Bank and Signature Bank, and attributed First Republic’s demise to a textbook bank run, a panic-based rush to withdrawals that might not have much to do with the health of the bank.
[This article has been reproduced with permission from Duke University's Fuqua School of Business. This piece originally appeared on Duke Fuqua Insights]