banking crisis

A banking crisis occurs when banks face significant financial difficulties, often due to a sudden loss of confidence from depositors or investments turning sour. This can lead to bank runs, where many customers withdraw their money simultaneously, causing liquidity shortages. Bank failures can spread instability across the economy, affecting loans, investments, and jobs. Unlike typical business failures, banking crises directly impact people's savings and access to credit. Governments and regulators typically intervene to stabilize banks, protect depositors, and restore confidence to prevent broader economic harm.