The term "bank contagion" refers to the possibility that one bank failure will cause a panic that leads to other bank failures.

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Bank contagion refers to the phenomenon where the failure of one bank or financial institution can lead to fear and panic among depositors and investors, leading to a loss of confidence in other banks or institutions, potentially causing them to fail as well. This can happen through a domino effect where the interconnectedness of financial institutions exacerbates the spread of financial distress.

The Term "Bank Contagion" Refers to the Possibility That One