A late-night news report says the president of a local bank is about to be arrested for embezzling money from the bank at which he works.This causes most of the depositors to line up in front of the bank the next morning wanting to withdraw their deposits.This is an example of:

Question

Quizplus · Accepted Answer

The situation described in the scenario represents liquidity risk, which is the risk that a bank may not be able to meet its obligations when they come due, including satisfying withdrawal requests from depositors. The news of the bank president's potential arrest caused depositors to panic and withdraw their funds, creating a sudden demand for liquidity that could potentially strain the bank's ability to meet those demands.

A Late-Night News Report Says the President of a Local