As we were very recently reminded, a disproportionate percentage of uninsured depositors can also present risk, since they may have strong incentives to withdraw their funds at the slightest sign of actual or perceived bank stress. These dynamics and incentives are certainly not new but have featured prominently in past bank runs. 5 The most significant shift has been one of speed.
This is where modern technology has played a significant role, both in facilitating the transfer of funds and in the access to, and expedited flow of, information among depositors. See Jonathan D. Rose, “Old-Fashioned Deposit Runs,” Finance and Economics Discussion Series 2015-111, table 1 (Washington: Board of Governors of the Federal Reserve System, November 2015), https://www.federalreserve.gov/econresdata/feds/2015/files/2015111pap.pdf.