credit crunch

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Credit crunch

A shortage of available credit for businesses and consumers. This situation could arise when lenders are reluctant to lend because of uncertainty of defaults or are willing to lend only at high interest rates thus making it difficult for businesses and consumers to secure credit. The term became popular the financial crisis that began in 2007 when a large number of homeowners either defaulted or were expected to default on mortgages, leading to great stress on the market in which these securitized loans were traded. The ensuing constriction in liquidity caused lenders to cut back on loans resulting in a credit crunch.

credit crunch

A period during which borrowed funds are difficult to obtain and, even if funds can be found, interest rates are very high. Credit crunches were particularly severe before 1980 when the ceilings on interest rates that financial institutions could pay resulted in a drying up of deposits.
References in periodicals archive ?
However, the rating specialist pointed out that a short-term liquidity squeeze among GCC banks could in some cases be moderated through temporary liquidity support from governments, central banks as well as the GCC banks' improved liquidity positions since the last 'crunch' in 2009.
If investors refuse to buy the debt on any terms, even a fiscally prudent government could find itself in a liquidity squeeze and become insolvent.
The Fed would then cause a liquidity squeeze and so distort asset prices as to make much construction, sizable amounts of other investment, and some consumption goods unaffordable (and thus unprofitable to produce).
Oputu reiterated that the N200 billion fund was to tackle the prevailing liquidity squeeze so as to provide credit access to operators for the restructuring of moribund factories, among others.
His colleague Ewald Nowotny said the ECB was committed to offering extra funds to ensure there is no liquidity squeeze.
However, domestic liquidity squeeze is expected to begin to pinch in January 2010," Jindal said.
Fourth quarter sales slowed significantly as a result of the onset of the global economic downturn and the subsequent liquidity squeeze," the company.
The bank said a liquidity squeeze in the market was expected to continue in the coming three to four months with occasional spikes.
Privately-held Saad Group sent shockwaves through the Gulf on Monday, saying it plans to restructure the debt of its units hurt by a liquidity squeeze brought on by the financial crisis as ratings agency Moody's cut its ratings on the group to junk.
Considering the current global liquidity squeeze, we have recognized the need to for investors to get better returns on their investment,Eoe1/4Y said Mohamed Amiri, Head of Retail Banking, Dubai Bank.
Spanish construction-to-services group Ferrovial has tried for over a year to renegotiate the debt in a deal aimed at cutting financial costs after original plans were delayed as bank credit dried up due to the global liquidity squeeze.