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A banking crisis refers to a situation in which a country's banking system experiences a sudden and severe disruption, usually resulting in a widespread loss of confidence in the financial institutions. This can lead to a series of bank failures, liquidity shortages, and other financial difficulties that have the potential to destabilize the entire economy. Banking crises can be caused by a variety of factors, such as excessive risk-taking by banks, poor regulation and supervision, economic downturns, or external shocks. The consequences of a banking crisis can be devastating, including a contraction in credit availability, a decline in economic growth, and a sharp increase in unemployment. Governments and central banks often intervene to try to stabilize the situation and prevent a full-blown financial meltdown.