Understanding bank runs via experimental approaches

Banking crises are among the biggest reasons that economies are affected negatively all over the world Bank runs, which are defined as depositors' withdrawing their money in banks collectively in a panic environment, are one of the biggest triggers of bank crises. Individuals' withdrawing their money from banks collectively without their needs may drag the banks in question and subsequently the economies into crises. In order to prevent the bank runs and to reduce their effects, individual factors should be examined in detail. The aim of this study is to examine bank runs, which constitute a serious risk factor for banking crises, by experimental methods on a micro basis. For this purpose, a survey was conducted with 192 participants, ranging in age from 18 to 53. In the literature, most od the experimental studies involve economics students as participants. In this thesis, it is aimed to obtain results that are more compatible with real life than laboratory experiments by including non-student participants in the questionnaire and enabling participants to respond under different scenarios. The results of the analysis provide no strong and significant relationships between the age, income and education levels of the participants and their rush to banks. However, it has been found that as the level of education increases, the probability of observing withdrawals decreases. In this context, it can be concluded that if the level of education increases, probability of bank runs decrease and a more stable financial sector will be possible. The results of the study indicate that in case of low deposits scenarios, the probability of depositors withdrawing their money from the bank decreases. In this context, it can be argued that the policy of securing a certain part of deposits held in commercial banks in Turkey is an appropriate policy.