Financial assistance provided by a government, central bank, or international institution to a failing company, bank, or sovereign economy to prevent its collapse. Bailouts can take the form of direct capital injections, emergency loans, asset purchase programs, or guarantees on toxic debt. While bailouts aim to prevent systemic contagion and protect depositors or employees, they are often controversial because the cost is ultimately borne by taxpayers and may incentivize future risk-taking through moral hazard.
Example
“The US government's $700 billion TARP bailout in 2008 purchased troubled assets from banks to stabilize the financial system during the global credit crisis.”