For most of the 1920s, how did the growth of credit affect the stock market?
in the 1920s, there was a rapid growth in bank credit and loans. encouraged by the strength of the economy people felt the stock market was a one way bet. some consumers borrowed to buy shares. firms took out more loans for expansion. because people became highly indebted, it meant they became more susceptible to a change in confidence. when that change of confidence came in 1929, those who had borrowed were particularly exposed and joined the rush to sell shares and try and redeem their debts.
nvestors bought more stocks on margin, and the stock market rose.
investors bought more stocks with cash, and the stock market rose.
investors took fewer risks on stocks, and the stock market declined.
investors took more risks on stocks, and the stock market declined.