At which times is credit rationing by banks likely to intensify?

Question

Quizplus · Accepted Answer

Credit rationing by banks is likely to intensify during an economic recession as banks become more cautious in their lending practices due to the higher risk of default from borrowers. During periods of rapidly falling interest rates or rapidly increasing stock market values, banks may be more willing to lend as they seek to take advantage of potential profits from increased borrowing and investment. A change in monetary policy announced by the central bank may also impact lending practices, but it is not always a guarantee that credit rationing will intensify. Therefore, option B is the best choice for this question.

At Which Times Is Credit Rationing by Banks Likely to Intensify