If this level of trust is broken, as was the case during the 2008–09 financial crisis, it can ultimately paralyze the activities of the financial intermediaries and the markets, generate uncertainty, and eventually cause panic, producing a run on the banks and paralyzing markets, leading to serious negative consequences for the overall economy.
It is obvious to us all that while there are situations when most of us need credit, it is by no means the “cure-all” financial product that it is often touted as. Some of these events are unpredictable, meaning that they are hard to save for, and when they occur, a loan may not be available or appropriate.