Question

The possibility that the failure of one bank can hasten the failure of other banks is called the:

Answer 1

Answer:

Contagion Effect

Explanation:

Contagion Effect is the spread of an economic crisis from one market or a region to another. It refers the diffusion effect of crisis throughout a market.

Simply put, If a large bank sells off most of its assets quickly, the confidence in other banks declines.

Hence, it's said to have followed the contagion effect, spread of a crisis from one market to another.