What is a Bank Holiday?
A bank holiday is a business day during which financial institutions are closed. Bank holidays are most relevant for physical branch locations because many online banking services continue to operate.
A bank holiday is an official holiday when banks and most businesses are closed for a day.
The dates are major federal holidays when most financial institutions — stock exchanges, brokerage firms, and traders — also take the day off. Although rare, bank holidays can also be declared to prevent bank runs.
A bank holiday is a day where banks are closed to public customers and cease their operations, typically for nationally recognized holidays. Bank holidays can also refer to the emergency closing of a bank in an effort to stop a run on the bank.
What Does Bank Holiday Mean?
During a bank-holiday, the banks are closed to the public and consumers cannot carry out bank transactions, such as deposits, transfers, withdrawals, clearing transactions, or foreign remittances or use the e-banking operations.
On the other hand, although banks are closed, they may operate in the shadow, performing various functions that will allow them to effectively operate when they are open again. A holiday may occur to protect the banks from collapse and banking panic and to allow the reorganization of operations. Often, after a holiday, capital controls are imposed on the level of withdrawals to regulate the inflows and outflows from capital markets into and out of a national capital account.
How a Bank Holiday Works
Each country defines its own bank holidays. In the United States, scheduled bank holidays do not necessarily coincide with stock market or capital market holidays. That is, there are certain stock exchange holidays that are not recognized as bank holidays.
However, most school, business, and stock exchange calendars reflect closures on bank holidays that are also major holidays such as New Year’s Day, Memorial Day, and Presidents’ Day.