0 economic conditions that make financial organizations less willing to lend money, often causing serious economic problems
1 economic conditions that make financial organizations less willing to lend money, often causing serious economic problems:
Japan experienced a major credit crunch in the late nineties.
2 the economic situation during 2007-2009, during which there were serious economic problems all over the world relating to financial organizations being unwilling to lend money:
Most politicians agree that the Credit Crunch was originally caused by irresponsible lending by banks.
The credit crunch has led to a sharp fall in the number of home loans.
Because this strengthening typically takes place through a reduction in credit creation, it can produce a credit crunch that exacerbates the recession.
If they focus on short run macroeconomic stabilization (avoiding a credit crunch) they may increase the probability of bank failures and bank panics.
If so, do policy-makers concentrate more on preventing bank failures or avoiding a credit crunch?
However, we do see some evidence of the predicted negative comovement between consumption and investment at the start of "credit crunch" periods.
The following section reviews the existing literature on bank regulation, bank failures and panics, and the credit crunch issue.
This reduction of assets, particularly in the supply of loans, can cause a credit crunch.
We examine whether this policy-dilemma is empirically observable, and whether policy-makers concentrate more on preventing bank failures or avoiding a credit crunch.
Consequently, policy-makers face a dilemma between safeguarding the banking system (preventing bank failures and/or bank panics) and preventing a further deterioration in aggregate economic conditions (credit crunch).
