Bailout

A bailout occurs when a business, individual or even a government experiencing severe financial difficulties is given financial assistance that solves the immediate financial distress. Governments may bail out banks to prevent transmission effects into the broader economy and avoid systemic risk. Investors may provide bailout funds to companies in distress as a means of securing an equity stake in the company at low cost ahead of a corporate restructuring. Supranational organisations may provide emergency assistance to governments experiencing severe imbalances.