A classic banking panic resulted from
A) Fractional reserve commercial banks
B) Insufficient liquid assets at commercial banks to meet withdrawals
C) A nervous public worried about the safety of their funds on deposit
D) All of the above

Question

Quizplus · Accepted Answer

Classic banking panics typically result from a combination of fractional reserve banking, where banks hold only a fraction of deposits in reserve; insufficient liquid assets to meet withdrawals, leading to a liquidity crisis; and a nervous public fearing for the safety of their deposits, which can lead to a run on the bank.

A Classic Banking Panic Resulted from