Understanding Credit crunches

Credit crunches are usually considered to be an extension of recessions. A credit crunch makes it nearly impossible for companies to borrow because lenders are scared of bankruptcies or defaults, which results in higher rates. The consequence is a prolonged recession (or slower recovery), which occurs as a result of the shrinking credit supply.

Read more: http://www.investopedia.com/terms/c/creditcrunch.asp#ixzz2M09MeA6H


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