What happens when a Bank goes Bust? Normal Insolvency: Banks can become insolvent when loan defaults exceed shareholder equity, rendering assets less than liabilities. Cash Flow Insolvency: Bank runs or liquidity crises can lead to insolvency, where withdrawals outpace a bank's ability to pay. Importance of Deposit Insurance: In countries without deposit insurance, insolvent banks may fail to repay depositors fully, triggering financial instability. Sign up for more - https://www.simpleliquidation.co.uk/