What was NOT a reason for the credit crunch of 2008-09?
A) mistrust between financial intermediaries
B) illiquidity of debt markets
C) the arrest of Bernard Madoff
D) bankruptcy of one of the leading financial institutions

Question

Quizplus · Accepted Answer

The arrest of Bernard Madoff was a high-profile case of financial fraud, but it was not a direct cause of the credit crunch. Rather, the credit crunch was primarily driven by a failure of the housing market and the subsequent collapse of mortgage-backed securities, which led to a loss of confidence in financial institutions and a freeze in credit markets. Mistrust between financial intermediaries, illiquidity of debt markets, and the bankruptcy of leading institutions were all factors that contributed to the credit crunch.

What Was NOT a Reason for the Credit Crunch of 2008-09