The financial accelerator theory states that when credit market frictions of asymmetric information are present, the effects of small shocks on real economic activity are being propagated and amplified through time. In the case of an adverse shock, for example, the implied contraction in production, investment and consumption will be amplified, which may lead the market to economic distress and downturns. At the heart of this amplification mechanism are endogenous changes within the credit markets that were triggered from the shock, causing e.g. limitations in borrowers' access to credit. This theory further predicts that such credit limitations will be more severe for 'lower-quality' borrowers than to 'high-quality' borrowers – the so called 'Flight to Quality' hypothesis.This volume analyzes the effects of the Global Financial crisis (2007-2009) on the Israeli market. Finding show that the effects of the crisis on credit markets differed across sectors: the non-bank markets – in particular the bonds market and Non-Banks Financial Institutes (NBFI) had experienced economic distress throughout 2008, and credit from these markets became limited; whereas the banking system kept resilient through the period and credit extensions grew. These differences across financial sectors are attributed to market frictions present within non-bank markets – as the Financial Accelerator predicts. The effects of the global crisis on the Israeli economy were nonetheless mild and the contraction in real activity was short (i.e. relative to other economies). In particular, these effects were not as severe as theory predicts. Findings then show that other elements of the theory were present: low-quality borrowers were discriminated by lenders, namely the 'Flight to Quality'