Another phenomenon that compounded the nation’s economic woes during the Great Depression was a wave of banking panics or “bank runs,” during which large numbers of anxious people withdrew their deposits in cash, forcing banks to liquidate loans and often leading to bank failure.Click to see full answer. Moreover, what are the causes of bank failure?The most common cause of bank failure occurs when the value of the bank’s assets falls to below the market value of the bank’s liabilities, or obligations to creditors and depositors. This might happen because the bank loses too much on its investments, especially if it loses a large amount in one area.One may also ask, what was the bank run of 1930 and what are some of the reasons it happened? The Bank Run happened right after the Stock Market Crash of 1929. Due to this crash, many individuals were not able to pay back banks for the loans they took out. This lack of currency caused a panic, resulting in banks running out of currency. This leads to the Bank Runs of the 1930’s. Beside this, what was one reason many banks failed during the early 1930s? Deflation increased the real burden of debt and left many firms and households with too little income to repay their loans. Bankruptcies and defaults increased, which caused thousands of banks to fail. In each year from 1930 to 1933, more than 1,000 U.S. banks closed.Why did many banks fail in 1929 quizlet?on October 29, 1929, $10- $15 billion loss in value and stocks fell drastically. This is when the Stock Market crashed. Why did the stock market crash cause banks to fail? The banks failed when the stock market crashed becuase the banks invested all their money into stocks.