The possibility that the failure of one bank can hasten the failure of other banks is called the:

Question

Business

Toby Dickson

3 July, 11:16

The possibility that the failure of one bank can hasten the failure of other banks is called the:

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Answers (1)

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Tyrell Obrien · Answer 1

Contagion Effect

Explanation:

Contagion Effect is the spread of an economic crisis from one market or a region to another. It refers the diffusion effect of crisis throughout a market.

Simply put, If a large bank sells off most of its assets quickly, the confidence in other banks declines.

Hence, it's said to have followed the contagion effect, spread of a crisis from one market to another.