Unlocking Credit

p Unlocking Credit Unlocking Credit The atrophy of the credit markets can be viewed as an outgrowth of the larger banking crisis , which is , itself , compounded of various strands of fiduciary collapse . In Chapter Three "Determinants and Characteristics of Banking Crises " attention is given to possible solutions to the credit freeze and banking crisis , but the solutions are regarded as being both multiple and inter-dependent , so that enacting policies to reverse the present trends and get the credit markets moving again is a process which will involve complex challenges . One aspect

of the current crises which makes reparation of the credit markets more difficult is the fact that "Crisis episodes are typically associated with a dramatic weakening of balance sheets , on the side of both banks and borrowers . To the extent that banks represent a major source of financing , credit contraction due to plummeting net worth may lead to a forced reduction of investment and consumption spending (Banking , 29 and this type of contraction can be very difficult to reverse

Chapter Three "Determinants and Characteristics of Banking Crises argues that there are two major categories of concern relative toto the crisis and these aspects may be identified as "moral hazard " and "liquidity (Banking , 30 . In the area of "moral hazard " the determinants of how moral hazard impacts the credit and banking crises is based on "A set of macroeconomic variables and banking variables (Banking , 32 , which by necessity must be "addressed both by attacking the sources of the problem and...