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Liquidity crisis

Index Liquidity crisis

In financial economics, a liquidity crisis refers to an acute shortage (or "drying up") of liquidity. [1]

55 relations: Accounting liquidity, Asset, Balance sheet, Bank run, Cash, Central bank, Collateral (finance), Collateralized debt obligation, Competition (economics), Convertibility, Credit crunch, Credit risk, Creditor, Debt restructuring, Debt-to-equity ratio, Demand deposit, Diamond–Dybvig model, Discount window, Emerging markets, Equity (finance), Financial accelerator, Financial capital, Financial crisis, Financial crisis of 2007–2008, Financial economics, Financial innovation, Financial intermediary, Financial market participants, Fire sale, Flight-to-liquidity, Funding liquidity, Insolvency, Interbank lending market, Investor, Lasse Heje Pedersen, Law of one price, Leverage (finance), Liquidity risk, Long-Term Capital Management, Margin (finance), Market liquidity, Markus Brunnermeier, Moral hazard, Mortgage-backed security, Nash equilibrium, Net worth, Network effect, Open economy, Security (finance), Structured finance, ..., Subprime mortgage crisis, United States Treasury security, Unsecured debt, 1997 Asian financial crisis, 1998 Russian financial crisis. Expand index (5 more) »

Accounting liquidity

In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due.

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Asset

In financial accounting, an asset is an economic resource.

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Balance sheet

In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as Government or not-for-profit entity.

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Bank run

A bank run (also known as a run on the bank) occurs when a large number of people withdraw their money from a bank, because they believe the bank may cease to function in the near future.

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Cash

In economics, cash is money in the physical form of currency, such as banknotes and coins.

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Central bank

A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates.

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Collateral (finance)

In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.

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Collateralized debt obligation

A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS).

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Competition (economics)

In economics, competition is a condition where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm.

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Convertibility

Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value.

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Credit crunch

A credit crunch (also known as a credit squeeze or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks.

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Credit risk

A credit risk is the risk of default on a debt that may arise from a borrower failing to make required payments.

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Creditor

A creditor is a party (for example, person, organization, company, or government) that has a claim on the services of a second party.

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Debt restructuring

Debt restructuring is a process that allows a private or public company, or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations.

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Debt-to-equity ratio

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

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Demand deposit

Demand deposits, bank money or scriptural money are funds held in demand deposit accounts in commercial banks.

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Diamond–Dybvig model

The Diamond–Dybvig model is an influential model of bank runs and related financial crises.

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Discount window

The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

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Emerging markets

An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market.

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Equity (finance)

In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned.

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Financial accelerator

The financial accelerator in macroeconomics is the process by which adverse shocks to the economy may be amplified by worsening financial market conditions.

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Financial capital

Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc.

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Financial crisis

A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value.

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Financial crisis of 2007–2008

The financial crisis of 2007–2008, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

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Financial economics

Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade".

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Financial innovation

Financial innovation is the act of creating new financial instruments as well as new financial technologies, institutions, and markets.

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Financial intermediary

A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions.

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Financial market participants

There are two basic financial market participant categories, Investor vs.

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Fire sale

A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy.

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Flight-to-liquidity

A flight-to-liquidity is a financial market phenomenon occurring when investors sell what they perceive to be less liquid or higher risk investments, and purchase more liquid investments instead, such as US Treasuries.

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Funding liquidity

Funding liquidity is the availability of credit to finance the purchase of financial assets.

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Insolvency

Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent.

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Interbank lending market

The interbank lending market is a market in which banks extend loans to one another for a specified term.

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Investor

An investor is a person that allocates capital with the expectation of a future financial return.

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Lasse Heje Pedersen

Lasse Heje Pedersen (born October 3, 1972) is a Danish financial economist known for his research on liquidity risk and asset pricing.

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Law of one price

"The law of one price (LOOP) states that in the absence of trade frictions (such as transport costs and tariffs), and under conditions of free competition and price flexibility (where no individual sellers or buyers have power to manipulate prices and prices can freely adjust), identical goods sold in different locations must sell for the same price when prices are expressed in a common currency.

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Leverage (finance)

In finance, leverage (sometimes referred to as gearing in the United Kingdom and Australia) is any technique involving the use of borrowed funds in the purchase of an asset, with the expectation that the after tax income from the asset and asset price appreciation will exceed the borrowing cost.

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Liquidity risk

Liquidity risk is a financial risk that for a certain period of time a given financial asset, security or commodity cannot be traded quickly enough in the market without impacting the market price.

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Long-Term Capital Management

Long-Term Capital Management L.P. (LTCM) was a hedge fund management firmA financial History of the United States Volume II: 1970–2001, Jerry W. Markham, Chapter 5: "Bank Consolidation", M. E. Sharpe, Inc., 2002 based in Greenwich, Connecticut that used absolute-return trading strategies combined with high financial leverage.

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Margin (finance)

In finance, margin is collateral that the holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty.

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Market liquidity

In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset's price.

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Markus Brunnermeier

Markus Konrad Brunnermeier (born March 22, 1969) is an economist, who holds the Edwards S. Sanford professorship at Princeton University.

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Moral hazard

In economics, moral hazard occurs when someone increases their exposure to risk when insured.

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Mortgage-backed security

A mortgage-backed security (MBS) is a type of asset-backed security that is secured by a mortgage or collection of mortgages.

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Nash equilibrium

In game theory, the Nash equilibrium, named after American mathematician John Forbes Nash Jr., is a solution concept of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.

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Net worth

Net worth is the value of all the non-financial and financial assets owned by an institutional unit or sector minus the value of all its outstanding liabilities.

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Network effect

A network effect (also called network externality or demand-side economies of scale) is the positive effect described in economics and business that an additional user of a good or service has on the value of that product to others.

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Open economy

An open economy is an economy in which there are economic activities between the domestic community and outside.

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Security (finance)

A security is a tradable financial asset.

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Structured finance

Structured finance is a sector of finance, specifically Financial law that manages leverage and risk.

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Subprime mortgage crisis

The United States subprime mortgage crisis was a nationwide banking emergency, occurring between 2007 and 2010, that contributed to the U.S. recession of December 2007 – June 2009.

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United States Treasury security

A United States Treasury security is an IOU from the US Government.

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Unsecured debt

In finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, or collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment.

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1997 Asian financial crisis

The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.

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1998 Russian financial crisis

The Russian financial crisis (also called Ruble crisis or the Russian Flu) hit Russia on 17 August 1998.

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References

[1] https://en.wikipedia.org/wiki/Liquidity_crisis

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