What does it mean if a bank fails and how does it impact customers and the economy?

When a bank fails, it means that it is unable to meet its financial obligations and may be closed down by regulators. This can impact customers by potentially losing their deposits if they exceed the insured limit set by the government. It can also lead to a loss of confidence in the banking system, causing a ripple effect on the economy as people may withdraw their money from other banks, leading to a credit crunch and economic instability.