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 a liquidity crisis, as banks typically do not keep enough cash on hand to cover all deposits. Instead, they invest a portion of these deposits in loans and other assets. During a bank run, the bank may struggle to meet withdrawal requests, which can further erode public confidence. If the situation escalates, it can lead to the bank's failure, impacting not only the institution but also the broader financial system and economy, often requiring intervention from entities like the Federal Reserve.