Credit crunches occur when

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During a credit crunch, there is a shortage of credit available for borrowers, which means that the quantity demanded of credit is greater than the quantity supplied at the prevailing interest rate. This can happen due to various reasons such as a recession, a banking crisis, or a sudden increase in interest rates. As a result, lenders may tighten their lending criteria, increase interest rates or reduce lending, which further exacerbates the credit crunch.

Credit Crunches Occur When