An economic condition whereby investment capital is difficult to obtain. Banks and investors become weary of lending funds to corporations thereby driving up the price of debt products for borrowers.
Investopedia Says:
Credit crunches are usually considered to be an extension of recessions. A credit crunch makes it nearly impossible for companies to borrow because lenders are scared of bankruptcies or defaults, which result in higher rates. The consequence is a prolonged recession (or slower recovery) resulting from the supply of credit having shrunk.
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