Liquidity Squeeze

When concern about the short-term availability of money causes reluctance among financial institutions to lend out money from their reserves. This hold on reserves causes the interbank market rate to rise, making it more expensive for banks to borrow from each other. Ultimately, this causes credit standards to tighten, making it more difficult and expensive for consumers to receive loans.

In order to limit the impact of liquidity squeezes, central banks will often increase liquidity by injecting more money into the economy through lower interest rates. Doing so gives financial institutions a less expensive alternative to borrowing. This process also serves to alleviate the fear of insufficient liquidity in the short run and make bank loans more accessible to consumers and businesses.


Investment dictionary. . 2012.

Look at other dictionaries:

  • liquidity crisis — noun a state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high • Syn: ↑credit crunch, ↑squeeze • Hypernyms: ↑financial condition …   Useful english dictionary

  • Names used to describe the Subprime Mortgage Crisis — Below are alternative names used to describe the current subprime mortgage crisis in the media: Credit Crisis [http://www.ft.com/cms/s/0/5279daec 8db9 11dd 83d5 0000779fd18c.html] Credit Crunch [http://news.cnet.com/8301 1001 3 10053693 92.html]… …   Wikipedia

  • Banking in Argentina — This article is about the banking system of Argentina, including an overview of the recent past. For details on the economy at large, see Economy of Argentina. During the 1990s, marked by President Carlos Menem s policies of liberalization,… …   Wikipedia

  • Ferrier Hodgson — ( FH ) is a group of Accounting firms specialising in Insolvency in the Australian and Asia Pacific region, with offices in all major capital cities in Australia, Hong Kong, Singapore, Malaysia, Indonesia, and Japan. Whilst FH s core business is… …   Wikipedia

  • Crise Financière — Concernant la crise financière actuelle voir article la crise financière de 2007 2009 et pour ce qui concerne plus spécialement les événements de l automne 2008 et ses suites crise financière de 2008 Le terme crise financière s emploie pour… …   Wikipédia en Français

  • Crise financière — Cet article parle du concept de crise financière . Pour la crise financière actuelle, consulter l article crise financière de 2007 2010 . Le terme crise financière s emploie pour désigner un ensemble assez large qui inclut notamment[1] les crises …   Wikipédia en Français

  • Crise financière internationale — Crise financière Concernant la crise financière actuelle voir article la crise financière de 2007 2009 et pour ce qui concerne plus spécialement les événements de l automne 2008 et ses suites crise financière de 2008 Le terme crise financière s… …   Wikipédia en Français

  • Crises financières — Crise financière Concernant la crise financière actuelle voir article la crise financière de 2007 2009 et pour ce qui concerne plus spécialement les événements de l automne 2008 et ses suites crise financière de 2008 Le terme crise financière s… …   Wikipédia en Français

  • David Rowland (property developer) — David Rowland Born David John Rowland 16 June 1945 (1945 06 16) (age 66)[1] Nationality British Known for millionaire property …   Wikipedia

  • Cyprus — <p></p> <p></p> Introduction ::Cyprus <p></p> Background: <p></p> A former British colony, Cyprus became independent in 1960 following years of resistance to British rule. Tensions between the Greek …   The World Factbook


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.