Financial Crisis Bank Run And Bankruptcy Essay - 3679 Words

1. Type of Crisis 1.1 Bank Run and Bankruptcy Bank run is situation when there are more depositors who withdrawal their money than investor who invest their money in the bank, due to issue of the bank experiencing financial problems. As many depositor who took their money in the bank, it makes the other depositors fear and panic, thus they also withdraw their savings. In some cases banks do not have eneough money. While, bankruptcy is a condition when a person or company can not pay their overdue debts. Bankruptcy process starts when the creditor and debtor began to file a lawsuit. Afterwards all of the assets of the creditor will be counted and seized in order to pay their debts. Subsequently all the debts paid off, the creditor will be decleared free from bankruptcy. (investopedia) 1.2 Fiscal crisis Fiscal crisis is a situation where the goverment can not pay for daily routine such as provide the social service and national defense. Fiscal crisis that experienced by the goverment give an impact to the lower unit, for instance country or state, province and city to face their own fiscal crisis. The goverment can not balance the fund when fiscal crisis occurs. They can not take sufficient funds to cover expense and can not raise the fund due to too much debt. Fiscal crisis lead to snowball effect, which means every financial problems contributed to the chaos and problems that will occur. (fsikal.co.id) While according to Tejvan Pettinger (2010), fiscal crisis leads to aShow MoreRelatedLehman Brothers And The Subprime Mortgage Crisis Essay1119 Words   |  5 PagesLehman Brothers filed for Chapter 11 Bankruptcy, the largest filing for bankruptcy in the history of the United States (U.S.). During this time, Lehman Brothers was the fourth largest investment firm in the U.S. It decla red $639 billion in assets and $613 billion in debts (Wiggins, Piontek, Metrick, 2014). 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