Financial institutions' health is key factor in bank runs, New York Fed research shows

Reuters

Tue, July 7, 2026 astatine 9:01 AM CDT 1 min read

NEW YORK, July 7 (Reuters) - Bank runs crook into bigger problems erstwhile fiscal institutions' broader ‌underlying wellness is nether challenge, caller probe from ‌the New York Federal Reserve showed connected Tuesday.

Data connection "little support" for ​the thought that tiny shocks tin make "widespread" banking panics, New York Fed researchers wrote successful a blog posting.

"Poor slope fundamentals are indispensable for slope runs to ‌translate into nonaccomplishment ⁠and for slope distress to make terrible economical distress," the probe said, adding that "although ⁠runs tin hap successful some anemic and beardown banks, mediocre fundamentals are indispensable for runs to effect successful ​bank failures."

The ​researchers noted that their ​findings are based connected ‌a caller database powered by artificial intelligence. "We usage ample connection models ... to extract accusation connected slope runs from millions of digitized humanities paper pages, creating the astir broad database of slope runs successful U.S. ‌history," they said.

The blog noted the ​importance of decently knowing slope ​runs, wherever declining ​confidence successful an instauration drives depositors ‌to effort to retrieve their ​deposits en masse. "Runs ​should frankincense beryllium seen arsenic a trigger for slope failures and crises, but insolvent banks are ​necessary for ‌this trigger to devastate the banking strategy and ​the economy," they wrote.

(Reporting by Michael S. Derby; ​Editing by Paul Simao)