Banking Failures
Banking failures occur when financial institutions, such as banks, are unable to meet their obligations to depositors and creditors. This can happen due to poor management, excessive risk-taking, or economic downturns. When a bank fails, it may be closed by regulators, leading to the loss of customer deposits and a loss of confidence in the banking system.
The consequences of banking failures can be severe, affecting not only the failed institution but also the broader economy. They can lead to a credit crunch, where lending becomes restricted, and can trigger recessions. Governments often intervene to stabilize the financial system and protect depositors through measures like bailouts or insurance programs.