Question

What contributed to the failure of thousands of banks across the country in the Great Depression?

Answer 1

The failure of thousands of banks in the Great Depression was caused by the stock market crash, lack of banking regulations, bank runs, and limited availability of credit.

Step-by-step explanation:

The failure of thousands of banks across the country in the Great Depression was primarily due to several factors:

1. Stock market crash: The crash of 1929 caused stock prices to plummet, leading to significant losses for banks that had investments in stocks.
2. Lack of banking regulations: The absence of proper regulations meant that if a bank went bankrupt, depositors lost all their savings.
3. Bank runs: Fearful depositors withdrawing their funds triggered bank failures, as banks held only a small percentage of their money as cash and invested the rest.
4. Limited availability of credit: The bank failures left many communities without the means to obtain loans, which further harmed the economic health of the area.