Banking crises or bank panics have started when ________.
A) there is a reduction of the adverse selection and moral hazard problems
B) there have been periods of low interest rates
C) depositors withdraw their funds from banks
D) when information is made available to investors

Question

Quizplus · Accepted Answer

Banking crises or bank panics occur when depositors start withdrawing their funds from banks in large numbers, leading to a liquidity crisis for the banks. This can cause a chain reaction of bank failures and have a severe impact on the economy. Factors that can trigger a bank run include rumors or news about the bank's financial health, loss of confidence in the banking system, or economic instability.

Banking Crises or Bank Panics Have Started When ________