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Revision as of 18:23, 23 August 2007 by Amadís (talk | contribs) (+ interwiki)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)A "credit crunch" is a recessionary period in a debt-based monetary system where growth in debt has slowed and subsequently causes a drying up of liquidity in an economy. It is often caused as result of lax and innapropriate lending, which results in losses for lending institutions and investors in debt. These institutions may then reduce the availability, cost and ease of obtaining credit, for fear of further losses. In some cases lenders may be unable to lend further, even if they wish, as a result of losses restraining their liquidity measures.
A credit crunch is the opposite of cheap, easy and plentiful lending practices, the likes of which have seen around the world, particularly in the last 5 years.
The 2007 subprime mortgage financial crisis may have brought about a credit crunch.
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