A banking crisis occurs when a significant number of banks face insolvency or severe financial distress, leading to a loss of confidence among depositors and investors. This situation can arise from various factors, including poor management, excessive risk-taking, or economic downturns. When banks fail, it can trigger a wider economic recession, affecting businesses and individuals alike. During a banking crisis, governments and central banks often intervene to stabilize the financial system. They may provide emergency funding, guarantee deposits, or implement policies to restore confidence. Historical examples include the 2008 financial crisis and the Great Depression, both of which had profound impacts on the global economy.