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What Do We Learn About the Causes of Banking Crises

question 59

Essay

What do we learn about the causes of banking crises by comparing crises throughout the world to those that have occurred in the United States?


Definitions:

Selling Bonds

The act of issuing debt securities by governments or corporations to investors in order to raise capital, with an obligation to pay back with interest.

Marketable Securities

Financial instruments that can be easily sold or bought on public stock and bond markets.

Line Of Credit

A flexible loan from a bank or financial institution that allows a borrower to draw down, repay, and reborrow funds up to a specified credit limit.

Leverage

The use of borrowed funds to increase one's investment capacity and potentially enhance the rate of return, also referring to influencing factors or the ability to influence outcomes.

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