Bank Runs

One of the historical examples of a bank run would be the Union-Rock plc. blue Rock plc is a British Bank which is ground at Regent Center near Newcastle upon Tyne in Northern England. Northern Rock joined the stock exchange as a minor bank and it was expected to be interpreted over by one of its larger rivals but has remained independent. On September 13 2007, Northern Rock had a notional credit run and asked the Bank of England for liquidity support as they faced problems raising funds in the money food market to replace maturing money market borrowings. The problems occurred due to the sub eyeshade crisis in the United States, which was a sudden rise in home foreclosures which started in USA in late 2006 and became a global financial crisis in 2007 and 2008. The banks assets were always sufficient to turn to its
Liabilities but it had liquidity problems as institutional lenders were anxious roughly lending to mortgage banks following the US sub-prime crisis.



On 14 September, the first day when the news was spread around more customers withdrew their savings. It was estimated that £1 cardinal was withdrawn by customers that day, about 5% of the total bank deposits held by the Northern Rock. On 17 September., as worried savers continued to go to some Northern Rock bank branches to withdraw their savings, it was reported that an estimated £2 billion had been withdrawn since the bank applied to the Bank of England for emergency funds. By early afternoon in London, Northern Rocks shares, which had lost 32% on the previous Friday, fell a further 40% from 438 pence to 263 pence.If you want to get a full essay, order it on our website: Orderessay



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