What is the meaning of financial crunch?

A financial crunch refers to a situation where there is a sudden and severe shortage of capital or liquidity, making it difficult for individuals, businesses, or governments to access funds or meet financial obligations. This can arise from various factors, including economic downturns, credit tightening, or unexpected expenses. During a financial crunch, borrowing costs may increase, and investment opportunities may diminish, leading to broader economic implications. Essentially, it signals a critical stress in financial markets or personal finances.