Why do countries with weak banking systems suffer more during financial crises?
Answer (1)
Countries with weak banking systems suffer more during financial crises because their banks may not have enough cash to survive sudden changes in the economy. If banks have too many unpaid loans, or if they gave out money without checking borrowers carefully, they might collapse when the crisis hits. This happened in several countries during the 1997 Asian Crisis. Weak banks cause fear among depositors, leading to bank runs. Businesses can't get loans, and the economy slows down. A strong, well-regulated banking system is like a safety net that helps keep the economy running even during hard times.
