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Reasons and Consequences of a Credit Crunch - Article
1 pages
Published by
neil Derek
Reasons and Consequences of a Credit Crunch
A credit crunch is better described as a situation when people find it difficult to seek loans
due to an unprecedented tightening of rules by banks and other financial institutions.
It can...
[More]
Reasons and Consequences of a Credit Crunch
A credit crunch is better described as a situation when people find it difficult to seek loans
due to an unprecedented tightening of rules by banks and other financial institutions.
It can
also be viewed as an elongated recession.
This kind of a situation makes it increasingly
difficult for companies or individuals to borrow, because money lenders are scared of
defaults in repayments and other ghastly consequences such as bankruptcies and higher
rates of interest.
Typically it is a financial void in which the credit supply seems to cease
with time.
Often a credit crunch is prompted by circumstances such as a major downfall in
the financial market followed by insecurities that may grip the financial institutions and
banks to offer loans to people.
In US the credit crunch seemed to have evolved due to a
crisis that erupted in the sub prime mortgage market.
During the past years, banks and
financial institutions had rendered loans and cred
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Tags
banks,
consequences,
credit,
crunch,
debts,
difficult,
economy,
financial,
institutions,
loans,
people,
prices,
prime,
real,
recession,
rules,
situation
