Credit Crunch Essay

CREDIT CRUNCH

Abstract
This report discussed the Financial Crisis which has taken place recently due to the credit crunch crisis, the way it is affecting the business prospects of many organizations and what counter measures the companies are taking to minimize the effect of the credit crunch on short, medium and long term effects on their business. This report also suggests some measures that the industry can implement to sustain itself in the current situation and weather out the storm before the markets normalize.

Introduction
The recent credit crunch have left many financial institutions crippled and have left many homeless and millions of jobs have been lost due to the bankruptcy and closure of many firms around the world. There have been numerous articles and publications on the recent credit crunch crises which all state one thing in common.   This has been defined as the sudden drop in the overall availability of loans (or credit) or a sudden increase in the cost of obtaining loans from banks. The financial crisis has been the worst in years and therefore has had an impact on the worldwide economy, how the business is carried out. The global overview on the economy looks grim and dull. Many experts believe that the credit crunch could last for a long time. Terry Smith the chief executive of Money Brokers Tullett Prebon has warned that “the current turmoil in the financial markets could take years not months to unwind”[1]. Though many financial analysts feel that this might last more than 12 months, the growth prospects for the year 2009 predicted is very low with the growth bottoming out during mid 2009 staying at 4.4% and then rising to 28.5% during Q3-Q4 and then rising to 31.3% during Q1-Q2 of the year 2010[2]. According to a recent survey conducted by Global finance.

What is Credit Crunch?
Credit crunch “refers to a sudden shortage of funds for lending, leading to a resulting decline in loans available”[3]. Credit crunch generally means that...