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Topic: Miscellaneous
Number of pages / Number of words: 6 / 1463
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The smaller banks became incapable of delivering funds to its investors, throwing them into an abyss of liquidation. In order to recover, these smaller banks looked for help from other banks trying to take loans. However in the midst of “evaporation” of liquidity, banks chose to refrain from inter-bank lending...


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This is referred to as the “credit-crunch” i.e. when the banks choose not to lend in between themselves to secure their own positions. This caused a recession for those smaller banks, causing some of them to either be nationalized or seek help from governments. At this point, governments decided to intervene once more and inject more money into the system to recover the markets and to assure the people of their savings...


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