What Is An Example Of Credit Crunch?

Credit crunch is not a rare event in past there have been a lot of cases in various countries like US and UK. In 1992 UK faced a credit crunch as the interest rate was increased to 15 per cent. While once in US, loans were handed out to any layman without any collateral or background check whatsoever. As the unsustainable cycle of lending finally caught up with the banks, the credit crunch set in. Banks stopped lending, and very few people who had the money began paying off their debts. No one was lending, no one was borrowing, and no one was repaying their debts. Eventually, this meant that new money stopped flowing through the economy.