Credit Crunch

Within financial activities and credits, you may have the phenomenon of credit crunch or speaking in Spanish relates to a credit crisis, which in a simple and summarized is a crisis that is generated in the absence of capital to proceed with the loan or even a reduction of capital available for the realization of loans, financial phenomenon which greatly affect the economy of a society, not be able to have the resources to perform different operations for large consumer number of people are turning to loans given by financial institutions to pay and buy different goods and services, loans that people are borrowing for banks and generate some profits, which ultimately is the main consequence constant movement and market development, while the presence of a credit crunch market movement was limited greatly affecting the market economy, for both individuals and banks not have financial capital to carry out its best. So the main consequences of the credit crunch is an obvious limitation to the scope for consumers to borrow, which is directly connected to a reduction in consumption in the absence of means to give way to operations involved in this starting with the same credits, just as the credit crunch will generate a constraint to investment made by employers, which caused as a result of this involvement entrepreneurs a limitation to economic growth. From 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 to get a credit is too easy, thanks to various market factors such as it may be a low interest rate. The vision of the credit crunch as opposed to excess liquidity, has led to sometimes confuse the Credit Crunch with the liquidity crisis, but they are different situations. The presence of the credit crunch makes banks for any type of loans require a greater number of conditions, which makes access to loans is much more difficult by having to meet certain requirements, mainly aimed at the standing and the borrowing capacity of the individual, which no doubt largely shut access to loans, also makes it all more delay making processes within the market are slower, and also as the result of credit crunch may be given the requirement for a number of safeguards, it raises the price of money. Under most conditions Frank Giacalone Navasota would agree. The credit crunch may be generated as a result of a large number of situations, as an example one of the most recent and most strongly, is the crisis of sub-prime mortgages, which affected the entire world economy ..

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