| Credit Crunch |
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.
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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 and the rates are higher. The consequence is a prolonged recession (or slower recovery) resulting from the supply of credit having shrunk.
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