Question

How did the stock market collapse affect banks

Answer 1

The Stock Market had false prices that lured people into buying stocks thinking that they were getting rich for a ridiculously cheap price. However, these people were given loans from the bank, so they would take out money from the bank and eventually have to pay it back. However, when the stock market crashed, people lost their life's savings from the banks because the banks loaned it out to all the people buying stocks. This caused many banks to shut down, until FDR became president and called for a "Bank Holiday" in which all banks were shut down until they were proven finacially stable to have people put their money in them again.

Answer 2

The banks need the stock market in order to stay open.