Within the financial activity and appropriations, the phenomenon of the credit crunch may occur or speaking in Spanish refers to a crisis in credit, which in a way simple and brief is a crisis that is generated in the absence of sufficient capital to make loans or also in a reduction of the capital available for the realization of loans, financial phenomenon which largely affect the economy of a society, not to have the possibility of having resources to perform different operations of consumption as large number of people resort to loans given by financial institutions to pay for and purchase various goods and services, loans for people are borrowing and banks a profit generating, which at the end the main consequence is constant movement and development of the market, whereas in the presence of a credit crunch the market movement should be limited greatly affecting the market economy, because both people and banking institutions and financial will not have the capital to perform its functions in the best way.
So the main consequences stemming from the credit crunch is a clear limitation to the possibilities that consumers borrow, have what is directly connected with a reduction in consumption in the absence of media that give passage to operations involving this, starting with the same receivables; Similarly the credit crunch will generate a limitation for the investment that employers, perform what caused as a result of this impairment entrepreneurs a constraint to economic growth. A simple analysis of the phenomenon that suggests the credit crunch, this is presented as opposed to excess liquidity, which is a period of time or stage of the market in which getting a credit is too easy, thanks to various factors of the market as it can be an interest rate low.
The vision of the credit crunch as opposed to excess liquidity, sometimes has led to confused the credit crunch with the crisis of liquidity, but are different situations. The presence of the credit crunch made banks for any type of loans require a greater number of conditions, which makes the access to loans is much more difficult to have that meet certain requirements, mainly targeted to the solvency and the ability of indebtedness of the person, which certainly closes largely access to loans, besides making everything take more making processes within the market are more slow; as a result of the credit crunch may be the requirement of a number top of guarantees, the cost of money rises. The credit crunch may be generated as result of a large number of situations, by way of example one of the most recent cases and greater strength, is sub-prime mortgage crisis, which affected the economy of the world.
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