Hey Everyone, I hope you are fine and doing great. This is my entry for the Free Write contest run by @mariannewest, today's topic is "Bank Failure". I hope this freewrite will be helpful for you and will enchance your knowledge.
Bank Failure Usually occurs when it is failed to meet it's Financial obligations and are forced to close their operations.
There could be many reason that can result in bank failure. Some are listed below
- Poor Management
- Bad loans
- Fraud
- Economic downtrent
This failure can have very bad impact on it's employes and customers.
Once a bank is failed and they are not able to give back their depositors fund, Governament Role come in to play, It always protect depositors/custorms by providing them insurence upto Certain point.
In the United States, for example, the Federal Deposit Insurance Corporation (FDIC) provides insurance coverage of up to $250,000 per depositor, per bank.
Bank failures can also have wider economic implications. They can lead to a decrease in lending, which can slow down economic growth of a country.
To prevent bank failure, banks Should be regulated and supervised by government agencies. These agencies Should set guidelines for capital requirements, liquidity, risk management, and other factors that affect the stability of banks.
