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There are few reasons why the banking sector collapsed during the great depression of 1929-1933. The following are some of those reasons:
1. The collapse in the value of currency -(Paper money)
2. The run that happened on banks where depositors collectively asked to get their money back from banks.
3. The great inflation that happened
4. The inability of the borrowers to pay back the banks their loans and associated interests
5. The collapse in the stock market and the loss that happened with it in the investors' confidence in the banking system.
Great Depression) is an economic crisis in 1929 and passing through the thirties and early forties, is the largest and most famous economic crises of the twentieth century and the proverbial what could happen in the twenty-first century and how bad the crisis that may occur The crisis began in America and historians say it started with the collapse of the market US stocks in the October 29, 1929, called the Black Balthelathae. The devastating impact of the crisis on almost all poor countries and rich ones, have fallen World Trade Between half and two-thirds, also fell an average per capita income and tax revenues, prices and profits. The most affected by the crisis are the cities, especially based on heavy industry and construction work virtually stopped in most states, as farmers affected by crop prices fall about 60% of its value.
It was approved on areas such as agriculture, mining and logging are the most affected sector and basic industries due to lack of demand for basic materials in addition to the lack of alternative employment opportunities. Also led to the suspension of factory production, and resulted in becoming whole families sleeping in shacks of cardboard and looking for strength in the dirt and garbage stores. Department of Health in New York has been recorded that more than one fifth the number of children suffering from malnutrition. The United States has started an economic boom in the twenties and then a recession and then the Great Depression in 1929, and then return in 1932. After the collapse of the clapper Wall Street he was still optimism prevailed, said the famous man of the industry, "John Rockefeller": "During these days there are a lot of pessimists, but during my life that lasted for ninety-three-year-old was the crises come and go, but you must prosperity always comes later." Crisis began disappearing in all countries at different times have nations prepared various programs for the advancement of the crisis and had caused the crisis in the political turmoil actuated to be either from the right countries or left also pushed desperate citizens to demagogy - It is the best known of Adolf Hitler - and was one of the reasons for the outbreak World war II
The crisis began with the collapse of a sudden and full of the Stock Exchange and with the stock in April 1930 began to recover and return to the levels of early 1929, but it remained far from the September levels of 1929 by about 30% and with that government spending has increased during the first half of 1930, however, consumer spending decreased by 10% due to heavy stock market losses in addition to the severe drought that has plagued season of American agricultural land at the beginning of the summer of 1930 knew Bkassah dust.
In early 1930 credit it was plentiful and at a rate of little interest except that people were reluctant to add more debt on credit, and in May 1930 was auto sales have fallen to the levels of mid-1928, and prices started to decline, but that salaries remained steady, but did not last long and fell in mid-1931, the agricultural areas were most affected by a drop in commodity prices Actions on the other hand, the crisis in the mining areas and areas of logging because of unemployment and the lack of alternative employment opportunities. The US economic contraction is a factor in the contraction of the economies of other countries in the frantic attempts to apply some countries preventive policies the US government has done in 1930 to impose tariffs on more than 20,000 items importer and known as the tariff Smoot Hawley received some countries impose tariffs retaliatory further compounding the collapse global trade and by the end of 1930 has continued at a steady rate of collapse that hit bottom in March / March 1933.
I agree with Mr Rahman answers, Thanks for the invitation.
thanks for inviting me , while i agree with Goergei and Nurdin Answer
Bank takes public money at a certain interest rate and provides loan to investor at a bit higher rate. The little margin the Bank gets is for their operating expenses and reasonable profit.
During the great depression, there was no work, no savings, no investment and in cyclical way, the Bank had no business and the Banking sector collapsed.
I apologize for the answer I do not know, I leave the answer to experts specialists in this field that's not my specialty field
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Thanks for invitation
I am agreeing with my colleague’s answers
agree with mr. georgei on his answer
