What a Credit Crunch?

The so-called credit crunch refers to financial institutions operating loans that raise their lending standards, issue loans at conditions higher than market interest rates, and are even reluctant to issue loans. This has led to a decline in credit growth and unsatisfactory social funding requirements. There are many reasons for the credit crunch, both institutional and managerial; there are both external and internal reasons. The credit crunch is a general phenomenon, not an individual phenomenon. This round of credit crunch is not only the policy following the excessive expansion of credit, but also the product of structural imbalances in the course of economic growth. The state has adopted a series of macro-control measures aimed at curbing the overheating of the economy. The policy of shrinking credit has restrained the rapid growth of credit and is reasonable.

Credit crunch

The so-called credit crunch refers to
Credit squeeze refers to "credit squeeze." The so-called credit crunch refers to the phenomenon that financial institutions operating loans have raised loan standards, and it is difficult for credit funds to meet the reasonable demand for social reproduction. The specific reasons for the credit crunch are various, such as the erosion of bank capital caused by non-performing loans; the credit expansion caused by excessive credit expansion; institutional reforms to curb the effective growth of loans; and financial
The phenomenon of credit crunch is universal, but the specific reasons for the credit crunch are manifold. Generally speaking, there are both institutional and management reasons; there are both external and internal causes. Specifically, the main reasons for the credit crunch are as follows:
the reason
Why are non-performing loans a direct cause of the credit crunch? If the existing or potential non-performing loan ratio of a financial institution is in the normal range, there is no need for financial institutions to reduce credit supply to normal market levels and investment projects
In the face of increasingly difficult loans, we must pay more attention to our own accumulation, self-improvement, and ability to do what we can to achieve rolling development. Don't blindly seek for the best, we must focus on guarantees and surprises. There are many successful examples in this regard. An electrochemical plant in a city is a small and medium-sized enterprise.
Since June 2003, the central bank has successively introduced some credit tightening measures, including the introduction of document No. 121
For several years, domestic house prices have been rising continuously. Regarding the rise in domestic house prices, in the early years, the statistics released by the government seemed to be mild, and as the government said, house price rises were lower than
On May 31, the People's Bank of China and the China Banking Regulatory Commission jointly issued a document requesting their branches and banking financial institutions to strictly implement credit controls to support energy conservation and emission reduction and to eliminate backward production capacity. The article pointed out that when banking financial institutions approve new credit projects and debt financing, they must strictly implement national product
1. The economy may fluctuate. Since the implementation of macro-control, credit
1. Appropriately adjust and relax loan standards to maintain reasonable growth in total credit. It is recommended to continue restricting some industries with repeated construction and excessive energy consumption
Government proposal
As credit funds enter, appropriate adjustments and easing of loan standards will be implemented to relax credit standards for companies and projects with market and profitability, to maintain a moderate growth in total loans, and to maintain reasonable credit fund support for rapid economic growth. The first is to continue to maintain financial support for the industrial economy and meet the needs for reasonable working capital for industrial production. The second is to continue to support the rapid development of the "agriculture, rural areas, and farmers" economy, promote the adjustment of the agricultural economic structure, and follow the path of agricultural industrialization. Third, while strengthening and standardizing the order of the real estate market, continue to support the rapid development of the real estate industry. Due to the continuous expansion of market demand, blindly restricting the development of the real estate industry will not only hinder the rapid rise of house prices, but also restrict residents' improvement of their quality of life and hinder the pace of national economic growth.
2. Improve the financing guarantee system for SMEs, and effectively solve the problem of SME loans. As the credit crunch has made the development of SMEs more difficult, it is necessary to improve the SME financing guarantee system as soon as possible. It is recommended to first establish multiple types of guarantee institutions. Such as setting up a policy guarantee fund to provide loans to SMEs, or establishing a mutual guarantee for SMEs. Second, we will do a good job of increasing the capital and stocks of policy guarantee institutions, and further expand the guarantee capacity. Such as the establishment of a regular compensation system for guarantee funds. The last is to expand the scope of the guarantee. It can actively try to apply for a number of guarantee businesses such as bill guarantee and credit guarantee for SMEs, and provide various services for SMEs to expand financing channels.
3. Implement regionally differentiated monetary policies to adapt the local economy to financial development. The rapid economic development and financial support are inseparable. Since the second half of 2003, some parts of the country have seen signs of overheating, prices have continued to rise, and inflationary pressures have increased. The state adopted a series of macro-control measures in a timely manner, and achieved significant results. However, because some regions, such as Sichuan Province, are located in the western part of the motherland, the economic development rate is far behind the developed areas along the east coast. The rapid decline in loans is not conducive to the sustainable development of the backward regions. It is recommended to introduce a monetary policy that combines local realities and considers the needs of local economic development as soon as possible, so as to adapt the local economy to financial development.

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