A bank failure occurs when a bank

Question

Quizplus · Accepted Answer

A bank failure occurs when a bank is unable to meet its depositors' requests to withdraw funds. This is because banks function by leveraging deposits to make loans and investments, and when depositors lose confidence in a bank's ability to repay their deposits, they may withdraw their funds en masse, causing the bank to fail. The other options (A, B, D, E) may contribute to a bank's failure, but they are not the defining characteristic of a failed bank.

A Bank Failure Occurs When a Bank