Definition

Noun: - The inability of a bank to meet its credit obligations: This refers to a situation where a bank cannot fulfill its promises to depositors and other creditors, typically because its assets are insufficient to cover its liabilities. This often leads to the bank being closed by regulators.

Usage

This term is used in financial, economic, and regulatory contexts to describe the collapse or closure of a banking institution. - It is a countable noun (e.g., a bank failure, several bank failures). - It often appears in discussions about financial crises, economic stability, and government insurance systems like the FDIC (Federal Deposit Insurance Corporation).

Examples

• The Great Depression was marked by a wave of bank failures across the country.
• The primary cause of the bank failure was a series of bad loans.
• To prevent a bank failure, the government arranged an emergency merger with a stronger institution.
• The bank failure caused many people to lose their life savings.

Advanced Usage

• Systemic bank failure: Refers to the collapse of multiple banks, threatening the entire financial system.
  • The 2008 crisis raised fears of systemic bank failure.
• To avert a bank failure: To take action to prevent a bank from collapsing.
  • The central bank injected capital to avert a bank failure.

Variants and Related Words

• Bank run (noun): A situation where many depositors withdraw their funds simultaneously due to fears of a bank's insolvency, which can cause a bank failure.
• Insolvency (noun): The state of being unable to pay debts, which is the core condition leading to a bank failure.
• Receivership (noun): A state in which a bank is placed under the control of a receiver, often following a failure.

Synonyms

• Collapse of a bank
• Bank insolvency
• Bankruptcy of a bank (Note: Technically, banks don't file for standard bankruptcy but are placed into receivership; this term is used colloquially.)

Related Phrases

• "To trigger a bank failure": To cause a bank to fail.
  • The massive fraud scandal triggered the bank failure.
• "In the wake of a bank failure": Following or as a result of a bank failure.
  • In the wake of the bank failure, new regulations were passed.

Noun

1. the inability of a bank to meet its credit obligations