Borrowing short and lending long. A solvent bank can still fail if enough depositors ask for their money at once.
A bank fails when its liabilities come due faster than its assets, which can happen to a solvent bank.
Any banking interview question on runs, deposit insurance, liquidity rules or March 2023.
From It's a Wonderful Life · 1946
The 2023 runs redistributed deposits towards the largest banks and exposed a pricing gap that already existed; they did not reprice the system.
Any question about the 2023 banking crisis, deposit flight or the funding advantage of the largest banks.
From Deposits and the March 2023 Banking Crisis–A Retrospective · Stephan Luck and Matthew Plosser, Federal Reserve Bank of New York (Liberty Street Economics)