Severe banking crises are usually followed by deep recessions and slow recoveries.

Question

Quizplus · Accepted Answer

This statement is true, as evidenced by historical data and economic analysis of past banking crises. After a severe banking crisis, the financial sector may experience significant instability and contraction, leading to a drop in economic activity and employment. Recovery can be slow and difficult due to factors such as damaged bank balance sheets, reduced credit availability, and uncertainty among investors and consumers.

Severe Banking Crises Are Usually Followed by Deep Recessions and Slow