Carrying on business on too large a scale for a firm’s capital. This creates a high risk that the firm will be unable to meet its commitments if it encounters temporary problems, for example delay in obtaining payments due from a debtor. Also, it may have to pay high interest rates for credit, since the shortage of capital makes lending to it risky. For a private firm overtrading is harmful to itself, and is discouraged by its bankers and creditors. For banks and some other financial intermediaries overtrading can significantly affect the public, as failure of one institution might be contagious and start a general financial panic. Bank regulators therefore try to prevent overtrading by requiring minimum levels of capital adequacy.