BANK FAILURE Meaning and
Definition
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Bank failure refers to an event in which a financial institution, typically a bank, becomes insolvent and is unable to meet its obligations to depositors and creditors. This occurs when a bank's assets are insufficient to cover its liabilities, resulting in the inability to honor withdrawals, loan repayments, and other obligations. Bank failures can have significant ripple effects on the broader financial system and economy, often triggering financial crises or recessions.
When a bank fails, depositors stand a risk of losing their savings. The extent of their loss may depend on the deposit insurance coverage available in their jurisdiction. In some countries, deposit insurance schemes are in place to protect depositors, ensuring they will be compensated up to a certain amount in the event of a bank failure. However, if deposit insurance coverage is limited or non-existent, depositors may bear the full brunt of the bank failure.
Bank failures can be caused by various factors including poor management, risky lending practices, a decline in asset values, fraud, or external economic shocks. They can also be a result of contagion, where the failure of one bank spreads distress to other financial institutions and triggers a crisis of confidence. To prevent bank failures and their associated risks, governments and regulatory authorities monitor banks' financial health, impose prudential regulations, and conduct stress tests to assess their resilience to adverse scenarios.
Common Misspellings for BANK FAILURE
- vank failure
- nank failure
- hank failure
- gank failure
- bznk failure
- bsnk failure
- bwnk failure
- bqnk failure
- babk failure
- bamk failure
- bajk failure
- bahk failure
- banj failure
- banm failure
- banl failure
- bano failure
- bani failure
- bank dailure
- bank cailure
Etymology of BANK FAILURE
The word "bank failure" consists of two parts: "bank" and "failure". Here is the etymology of both:
1. Bank: The term "bank" originates from the Old Italian word "banco", meaning a bench or money-changing table. This term was derived from the Germanic word "bankiz". In the medieval period, bankers in Italian city-states used to conduct their financial operations on benches in the marketplaces. The word "bank" gradually came to represent the financial institutions we know today.
2. Failure: The word "failure" comes from the Middle English word "failen", which entered English from Old French "faillir", meaning "to fail, be lacking or miss". The Old French term was derived from the Latin word "fallere", which carries a similar meaning of "to deceive, disappoint, or fall short".
Similar spelling word for BANK FAILURE
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