What does liquidity crisis mean?
Definitions for liquidity crisis
liq·uid·i·ty cri·sis
This dictionary definitions page includes all the possible meanings, example usage and translations of the word liquidity crisis.
Princeton's WordNet
credit crunch, liquidity crisis, squeezenoun
a state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high
ChatGPT
liquidity crisis
A liquidity crisis is a negative financial situation characterized by a lack of cash flow or availability of liquid assets needed to fulfill a company's or country's financial obligations. This crisis can occur due to an inability to convert assets into cash quickly or when a financial institution or business is unable to meet immediate and short-term obligations without suffering significant losses. It can result in insolvency or bankruptcy and cause widespread economic disruption.
Wikidata
Liquidity crisis
In financial economics, a liquidity crisis refers to an acute shortage of liquidity. Liquidity is a catch-all term that may refer to several different yet closely related concepts. Among other things, it may refer to market liquidity, funding liquidity, or accounting liquidity. Additionally, some economists define a market to be liquid if it can absorb "liquidity trades" without large changes in price. This shortage of liquidity could reflect a fall in asset prices below their long run fundamental price, deterioration in external financing conditions, reduction in the number of market participants, or simply difficulty in trading assets. The above mentioned forces mutually reinforce each other during a liquidity crisis. Market participants in need of cash find it hard to locate potential trading partners to sell their assets. This may result either due to limited market participation or because of a decrease in cash held by financial market participants. Thus asset holders may be forced to sell their assets at a price below the long term fundamental price. Borrowers typically face higher loan costs and collateral requirements, compared to periods of ample liquidity, and unsecured debt is nearly impossible to obtain. Typically, during a liquidity crisis, the interbank lending market does not function smoothly either.
Matched Categories
Numerology
Chaldean Numerology
The numerical value of liquidity crisis in Chaldean Numerology is: 8
Pythagorean Numerology
The numerical value of liquidity crisis in Pythagorean Numerology is: 5
Examples of liquidity crisis in a Sentence
The impact on property will be limited because for developers, funding access is more critical than borrowing cost, even if interest cost falls, access to borrowing is poor, so weak developers still cannot avoid a liquidity crisis when their sales slow.
In the end, the ECB is responsible, the ECB is the only one which can create new euros in a liquidity crisis.
Citizens suffered from the coronavirus and they all deserve to be rewarded for their pain and participation in preventive efforts, there is a need for the government to reserve as much financial power to brace for an economic shock with no end in sight and promptly respond to labour market insecurity and any potential corporate liquidity crisis.
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"liquidity crisis." Definitions.net. STANDS4 LLC, 2024. Web. 24 Apr. 2024. <https://www.definitions.net/definition/liquidity+crisis>.
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