Credit Crunch - Essay Example

Only on StudentShare

Extract of sample
Credit Crunch

During a credit crunch, also known as a "liquidity crisis" or a "credit squeeze", the banks won't or can't lend. Investors can't or won't buy debts. Suddenly it's very difficult to borrow money. There is a lack of easy money. Consumers and businesses have less to spend. There could be serious ramifications for an economy.
Even if the credit crunch is narrowly define as something that affects just banks, private equity and hedge funds, there is little out there to suggest that the British economy is out of the woods. Around the world, banks remain reluctant to lend to each other - or anyone else, for that matter, except blue-chip corporations or mortgage customers who can afford to furnish lenders with large up-front deposits.
House prices are down 13 per cent year-on-year and rising; the boss of Countrywide, the country's biggest lender, says one in 11 borrowers are falling behind on their home loan payments; house repossessions were up 57 per cent in March compared to the previous year; consumer confidence has hit a 26-year low
Almost 7,000 has been wiped off the value of the average British home since October 2007, after house prices dropped for a fifth consecutive month, according to latest survey figures. ...Show more

Summary

The economics profession is unclear as to what constitutes a "credit crunch." The crucial differences in definition depend on the cause of the contraction and whether credit is rationed by means other than price. Bernanke and Lown (1991) define a credit crunch as:
Author : luzwest
Credit Crunch essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Credit Crunch"
with a personal 20% discount.
Grab the best paper

Related Essays

Effects of credit crunch
onsidered below the poverty line (2011) 29.8% (2010 est.) Unemployment rate 6.4% (2012 est.) 6.5% (2011 est.) note: registered urban unemployment, which excludes private enterprises and migrants was 4.1% in 2010 9.9% (2012 est.) 9.8% (2011 est.) Budget revenues: $1.838 trillion expenditures: $2.031 trillion (2012 est.) revenues: $171.5 billion expenditures: $281 billion (2012 est.) Debt - external $710.7 billion (31 December 2012 est.) $656.3 billion (31 December 2011 est.) $299.2 billion (31 December 2012 est.) $287.5 billion (31 December 2011 est.) Investment (gross fixed) 45.9% of GDP (2012 est.) 30% of GDP (2012 est.) Public debt 38.5% of GDP (2011) 43.5% of GDP (2010) note: official data
6 pages (1500 words) Essay
Global Credit Crunch
The major causes could be termed as excessive liquidity, excessive lending, excessive leverage and excessive risk taking by the banks and other financial institutions. The global credit crisis posed a greater threat to UK Economy. It is estimated that almost 20,000 people will be losing their jobs alone in London's Financial Service Industry.
8 pages (2000 words) Essay
Credit Crunch Essay
The result is greater market fluctuation, which can lead to negative effects, such as more expensive mortgages, problems for pension savers, and even bankruptcy. Apart from that, credit crunches can occur even without an evident recession. "Credit crunch" has been the most commonly used new term over the past few years.
4 pages (1000 words) Essay
Credit Crunch Uk
Treasury secretaries and finance ministers worked late into the night looking for a way to grease the wheels of commerce and get the credit flowing again. The greatest economic minds in the world were at a loss to explain the crisis
8 pages (2000 words) Essay
Credit Crunch
dwardian summer" of prosperity and tranquillity and the trench warfare of the credit crunch - the failed banks, the petrified markets, the property markets blown to pieces by a shortage of credit” (Special report: Credit crisis - how it all began, 2008). The major reasons for
2 pages (500 words) Essay
Credit Crunch
The author states that the current financial problems are caused mainly because of the improper lending habits of banks. Banks were ready to satisfy all the customers who approached them for loans without any investigation about their financial abilities. Interest rates were cut down and the repayment periods were increased by the banks.
2 pages (500 words) Essay
Credit Crunch
Suddenly people have become unemployed, house prices have risen and banks have stopped helping the common man and woman on the street. It looks like a war; however the
2 pages (500 words) Essay
Credit Crunch
dwardian summer" of prosperity and tranquillity and the trench warfare of the credit crunch - the failed banks, the petrified markets, the property markets blown to pieces by a shortage of credit” (Special report: Credit crisis - how it all began, 2008). The major reasons for
2 pages (500 words) Essay
Credit crunch
There have been job cuts, firings and downsizing – all of which have hampered the basis of sanity within the world’s domains. It goes to show that credit crunch has played havoc with the world order and the people who have brought the globe
4 pages (1000 words) Essay
Credit crunch
In such condition, the connection between the interests rates and the availability of credit has unconditionally changed in such a manner that either the loan is fundamentally less than any quoted formal rate of interest or there stops to be a precise
10 pages (2500 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT