Liquidity Crisis (Noun)
Meaning
A state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high.
Classification
Nouns denoting natural processes.
Examples
- The financial institution was forced to sell off its assets at a loss during the liquidity crisis, resulting in significant losses for investors.
- Economists predicted a liquidity crisis in the housing market, as banks began to tighten their lending standards and restrict access to credit.
- During the 2008 liquidity crisis, governments around the world were forced to intervene with bailouts and monetary stimulus to prevent a complete collapse of the financial system.
- The liquidity crisis led to a sharp decline in economic activity, as businesses were unable to secure the financing they needed to operate.
- As interest rates soared during the liquidity crisis, consumers were priced out of the housing market, exacerbating the downturn.