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Why were "runs" on the banks so dangerous at the onset of the
depression?

User Ella
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2 Answers

3 votes

Answer:

During a bank run, a large number of depositors lose confidence in the security of their bank, leading them all to withdraw their funds at once. Banks typically hold only a fraction of deposits in cash at any one time and lend out the rest to borrowers or purchase interest-bearing assets like government securities.

Step-by-step explanation:

With the stock market crash of October 1929 everyone was growing very anxious of the security of all their money in the bank so starting first was the wealthy people puling all of their investment assts out of the economy and the consumers were spending less and less money. Also during a bank run the bank must quickly liquidate loans and sell its assets to come up with necessary cash and the losses they suffer can threaten the banks solvency.

User Hyundong Hwang
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bank runs had serious effects because of unsound banking practices, a large number of depositors lost confidence in the security of their bank which lead them all to withdraw their funds at once.

User Alexander Fedotov
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