Responses
Too many people were asking banks for loans at the same time and the banks didn’t have enough money to lend.
Too many people were asking banks for loans at the same time and the banks didn’t have enough money to lend.
Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
Because banks refused to give out loans using stocks for collateral, no one was using banks and they went out of business.
Because banks refused to give out loans using stocks for collateral, no one was using banks and they went out of business.
Banks loaned people stocks bought on credit, so when the stock prices decreased, everyone stopped using banks.
1 answer
The best explanation for why many banks failed during the Great Depression is:
Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
This situation, known as a bank run, occurred when a large number of customers withdrew their deposits simultaneously, causing banks to collapse because they did not keep enough cash on hand to meet the withdrawal demands.
