How can asymmetric information lead to a bank panic?

Name: How can asymmetric information lead to a bank panic?
Brand: Quizplus
Rating: 4.8 (37 reviews)

Question

Quizplus · Accepted Answer

The Answer is Depositors cannot judge the quality of their banks' loan portfolios.So,when they hear about a failed financial institution,they may worry about the safety of their deposits and begin to withdraw their funds from their bank.Even healthy institutions can go under if enough deposits are withdrawn quickly.

How Can Asymmetric Information Lead to a Bank Panic