To explain the stock market crash, “American aggregate demand fell substantially. Consumer purchases of durable goods and business investment fell sharply after the crash” (Romer). The financial crisis pushed consumers and businesses to stop spending money and start saving. Another aspect of the Great Depression was the banking crisis. The banking crisis started due to the financial crisis and this caused consumers to lose faith in their banks and ask them to return their money to them. Banks, “which typically hold only a fraction of deposits as cash reserves, must liquidate loans to raise needed liquidity. This process of hasty liquidation can lead to failure even of a previously solvent bank” (Romer). Loss of confidence in the solvency of banks causes people to start saving money at home and this in return causes many banks to close and at this time the Great Depression was in full swing