Bailout Definition

Definition: It refers to the provision of financial help or liquidity to a company or country which has serious financial difficulties or bankruptcy. Bailouts can take the forms of : 1) providing loans to a borrower that markets will no longer lend to; 2) guaranteeing a borrower’s debts; 3) guaranteeing the value of a borrower’s risky assets; 4) providing help to absorb potential losses, such as in a bank recapitalisation. For example, the U.S. government in 2008 that will see $700 billion put toward bailing out various financial organizations and those affected by the credit crisis.