A lending crisis refers to a significant and widespread disruption in the availability of loans and credit within the financial system. It typically occurs when lenders become overly cautious about extending credit due to concerns about borrowers’ ability to repay, often triggered by economic downturns, high levels of debt, or a collapse of asset prices. During a lending crisis, financial institutions may tighten lending standards, leading to a reduction in the flow of credit to consumers and businesses. This can exacerbate economic challenges, as individuals and companies struggle to obtain loans for essential needs, such as housing, education, or investments. The impact can be widespread, potentially leading to increased bankruptcies, unemployment, and a slowdown in economic growth. Overall, a lending crisis reflects a breakdown in the financial lending system, resulting in a credit squeeze that can have severe repercussions for both individuals and the broader economy.