Science, Tech, Math › Social Sciences Definition of Liquidity Share Flipboard Email Print Siri Stafford / Getty Images Social Sciences Economics U.S. Economy Employment Supply & Demand Psychology Sociology Archaeology Environment Ergonomics Maritime By Mike Moffatt Professor of Business, Economics, and Public Policy Ph.D., Business Administration, Richard Ivey School of Business M.A., Economics, University of Rochester B.A., Economics and Political Science, University of Western Ontario Mike Moffatt, Ph.D., is an economist and professor. He teaches at the Richard Ivey School of Business and serves as a research fellow at the Lawrence National Centre for Policy and Management. our editorial process Mike Moffatt Updated March 29, 2017 Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid. Terms related to Liquidity: Liquidity TrapLiquidity ConstraintThe Keynes Effect Resources on Liquidity: What Happens if Interest Rates Go To Zero?What is Money? Writing a Term Paper or High School / College Essay? Here are a few starting points for research on Liquidity: Books on Liquidity Financial crises, liquidity, and the international monetary system - Jean Tirole, Princeton, and Oxford: Princeton University Press, 2002.Cash flow forecasting and liquidity - Brian Coyle, Chicago, Ill. : New York: Glenlake Pub. Co., 2000.Managing corporate liquidity - Chicago: New York: Glenlake Pub., 1999 (2nd edition). Journal Articles on Liquidity Order Imbalance, Liquidity, and Market Returns - Tarun Chordia, Journal of Financial Economics v65, n1 (July 2002): 111-30.Domestic and International Supply of Liquidity - Bengt Holstrom, American Economic Review v92, n2 (May 2002): 42-45.Bank Bailouts and Aggregate Liquidity - Douglas W. Diamond, American Economic Review v92, n2 (May 2002): 38-41.A Dual Liquidity Model for Emerging Markets - Ricardo J. Caballero, American Economic Review v92, n2 (May 2002): 33-37.Liquidity Risk and Specialness - Andrea Buraschi, Journal of Financial Economics v64, n2 (May 2002): 243-84.