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Issue:

Business

 

Written by:

Patsy M

 

Date added:

January 19, 2014

 

Level:

University

 

Grade:

A

 

No of pages / words:

34 / 9333

 

Was viewed:

3679 times

 

Rating of current essay:

 
Essay content:

Since then, the common view is that governments must intervene to prevent or reduce the frequency of panics and a myriad of regulatory schemes have been implemented across many countries. In spite of the repeated attempts to stabilize banking systems, most countries experienced episodes of banking crises whose frequency and intensity increased in the last twenty years...
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A panic that encompasses a large part of the banking system can seriously disrupt economic activity. During a run, a bank experiences much heavier demand for deposit withdrawals than it can easily meet. If the run is severe enough, the bank will not be able to meet the demands of all depositors trying to withdraw money and, consequently, will have to suspend payments...
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