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Banking Term: Credit Squeeze

Jan 31, 2015 16:57 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.


    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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