A bank run occurs when a large number of customers withdraw their deposits simultaneously due to fears that the bank may become insolvent. This sudden demand for cash can lead to liquidity problems for the bank, as it may not have enough cash on hand to meet all withdrawal requests. Bank runs can create a cycle of panic, causing more customers to withdraw their money, further destabilizing the bank. Historically, events like the Great Depression saw significant bank runs, prompting governments to implement measures such as deposit insurance to protect customers and maintain confidence in the banking system.