A financial collapse occurs when the value of financial assets plummets, leading to widespread economic instability. This can happen due to various factors, such as poor management, excessive debt, or external shocks like a recession. When a financial system collapses, it can result in bankruptcies, job losses, and a decrease in consumer confidence. During a financial collapse, institutions like banks and stock markets may fail, causing panic among investors and the public. Governments often intervene to stabilize the economy, sometimes using measures like bailouts or stimulus packages. Historical examples include the Great Depression and the 2008 financial crisis.