Bank Failures

Definition

Bank failures occur when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities.

Related terms

Bank Run: A situation in which many customers withdraw their money from a bank simultaneously, fearing that the institution will become insolvent.

FDIC (Federal Deposit Insurance Corporation): A U.S. government corporation providing deposit insurance guaranteeing the safety of depositor's accounts in member banks up to $250,000 per account.

Insolvency: The state of being unable to pay debts owed.