Banking Term: Credit Squeeze

Find important banking term that is useful in upcoming banking exam.

Created On: Jan 31, 2015 16:57 IST
Modified On: Feb 2, 2015 11:08 IST

Credit Squeeze is a situation in which bank disagrees in issuing new loans and credit  due to risk of default cases of the borrower. This type of situation arises during the times of recession and financial instability. It adversely affect job creation and down economic growth of the country. It is another name for Credit Crises.

Question

Credit crunch stands for

a) The central bank stops acting as lender of last resort

b) Some retail banks go bankrupt.

c) The central bank stops issuing money.

d) Banks are unwilling to trade assets from each other

e) None of these

Answer: d

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