depositor preference

Depositor preference is a legal principle that prioritizes the claims of bank depositors over other creditors in the event of a bank failure or liquidation. This means that if a bank goes under, the money deposited by customers is repaid before the bank's other debts are settled. This preference aims to protect individuals and businesses that trust banks with their savings, ensuring they receive their money back first. It reinforces confidence in the banking system by safeguarding depositors, making banks safer places for financial transactions.