Us interest rates during the credit crisis

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Reference no: EM131225841

U.S. Interest Rates during the Credit Crisis:

During the credit crisis, U.S. interest rates were extremely low, which enabled businesses to borrow at a low cost.

Holding other factors constant, this should result in a higher number of feasible projects, which should encourage businesses to borrow more money and expand. Yet many businesses that had access to loanable funds were unwilling to borrow during the credit crisis.

What other factor changed during this period that more than offset the potentially favorable effect of the low interest rates on project feasibility, thereby discouraging businesses from expanding?

Reference no: EM131225841

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