What caused the bank panic?

Bank panics are typically caused by a loss of confidence among depositors, leading to mass withdrawals. This can be triggered by factors such as rumors of insolvency, financial instability, or economic downturns. When too many customers attempt to withdraw their funds simultaneously, banks, which operate on a fractional reserve system, can become unable to meet these demands, resulting in a liquidity crisis. Such panic can escalate quickly, often exacerbated by media coverage and social contagion.