DEFINITION of Bank Holiday
A bank holiday is a business day, during which commercial banks and savings & loans institutions are closed to the public. Bank holidays are even more relevant for physical branch locations as some online banking services continue to operate. Bank holidays usually coincide with federal holidays in the United States; however, each country defines is own bank holidays.
Infrequently, a bank holiday can also refer to a day of an emergency bank closure to avert a bank run. This type of bank holiday originated as a result of the Emergency Banking Act of 1933 during the Great Depression in the United States.
BREAKING DOWN Bank Holiday
In the United States, scheduled bank holidays do not necessarily coincide with stock market or capital market holidays, although they do tend to be federal holidays. For example, in 2018, according to the Federal Reserve Bank of Chicago, bank holidays are:
January 1st (New Year’s Day), January 15th (Martin Luther King Day), February 19th (President’s Day), May 28th (Memorial Day), July 4th (Independence Day), September 3rd (Labor Day), October 8th (Columbus Day), November 12th (Veteran’s Day), November 22nd (Thanksgiving Day), and December 25th (Christmas Day).
While the 2018 Nasdaq holiday calendar is as follows:
January 1st (New Year’s Day), January 15th (Martin Luther King Day), February 19th (President’s Day), March 30th (Good Friday), May 28th (Memorial Day), July 3rd (1pm early market close in the U.S.), July 4th (Independence Day), September 3rd (Labor Day), November 22nd (Thanksgiving Day), November 23nd (1pm early market close in the U.S.), December 24th (1pm early market close in the U.S.), and December 25th (Christmas Day).
(Nasdaq is a global electronic marketplace for buying and selling securities, which the National Association of Securities Dealers (NASD) created in 1971 to enable investors to trade on a computerized, rapid and transparent system.)
Bank holidays do not incorporate early closes as with stock market holidays. In addition bank holidays will never occur for two consecutive business days as this could cause too large of a disruption for everyday transactions and financial flows.
Bank Holidays and Online Banking
Most online banking systems will still allow access by customers even on bank holidays.
Popular online banking services include: deposits, withdrawals, transfers, and bill payments (essentially, the majority of the basic transactions an individual or retail customer would need throughout the day). In the United States some well known online banks include Ally Bank, Bank5 Connect, Discover Bank, GE Capital Bank and Synchrony Bank.