BNET Business Dictionary
Business Definition for: Liquidity
- a condition in which assets are held in a cash or near cash form
Wiktionary Definition for: Liquidity
- #The state or property of being liquid.
- # economics An asset's property of being able to be sold without affecting its value; the degree to which it can be easily converted into cash.
- Ex:''Some stocks are traded so rarely that they lack '''liquidity'''.''
Additional Resources
- Liquidity and Expected Returns: Lessons from Emerging Markets
- Given the cross-sectional and temporal variation in their liquidity, emerging equity markets provide an ideal setting to examine the impact of liquidity on expected returns. The measure of liquidity is the proportion of zero daily firm returns, averaged over the month. This paper finds that this liquidity measure significantly predicts...
- White papers 2003-09-08
- The Mechanics of e-Market Liquidity
- With some insight into Liquidity Mechanics, e-Market managers can overcome the biggest challenge in trying to grow a B2B e-market – shifting transaction volume away from the competition. Liquidity is the effective scale of an e-business in terms of overall adoption and transaction volume. This document explains how to develop...
- White papers 2003-01-01
- Is There a Global Liquidity Factor?
- This paper investigates country, industry, and global commonalities in liquidity of individual stocks, and analyzes their implications for the pricing of financial assets in an international framework. The results for three different monthly liquidity measures — based on daily return and trading volume data suggest that individual stock liquidity exhibits...
- White papers 2003-10-01
- Hedging Against Liquidity Risk and Short Sale Constraints
- This paper exploits the intuition of the ICAPM to propose a measure that formally compares the empirical performance of competing asset pricing models in the presence of short selling constraints. In a multifactor context, portfolios are said to be efficient if they yield the highest expected return for a given...
- White papers 2003-01-01
- Adjusting The Liquidity Spigot
- The article asserts that new tools that improve balance reporting, funds concentration, cash forecasting and short-term investing and borrowing are taking liquidity management to the next level. Cash is still the king, even though his retinue of human handlers is much depleted since the 1980s. In fact, his influence is...
- White papers 2001-10-01
- Hedging Against Liquidity Risk and Short Sale Constraints
- This paper exploits the intuition of the ICAPM to propose a measure that formally compares the empirical performance of competing asset pricing models in the presence of short selling constraints. In a multifactor context, portfolios are said to be efficient if they yield the highest expected return for a given...
- White papers 2003-01-01
- Asset Pricing With Liquidity Risk
- This paper solves explicitly an equilibrium asset-pricing model with liquidity risk - the risk arising from unpredictable changes in liquidity over time. In our liquidity-adjusted capital asset pricing model, a security's required return depends on its expected liquidity as well as on the covariance of its own return and liquidity...
- White papers 2004-09-01
- Systemic Liquidity And The Composition Of Foreign Investment: Theory And Empirical Evidence
- This paper studies the impact of liquidity on investors' choice between FDI and FPI. As argued in Goldstein and Razin (2006), this choice could be influenced by the trade off between management efficiency and liquidity effects. Here we extend their model by assuming liquidity shocks to individual investors are triggered...
- White papers 2006-12-24
- CLS Liquidity : Managing Liquidity In a CLS Environment
- For making decision, sound liquidity stage should be maintained in the organization becaused liquidity is a part of working capital. Liquidity creation and delivery is the most crucial banking activity, influencing almost every aspect of a bank's business. As the scope and complexity of financial activities grew, new tools and...
- White papers 2003-01-01
- Bank Mergers, Competition and Liquidity
- This white paper provides a model of the impact of bank mergers on loan competition, individual reserve management and aggregate liquidity risk. Banks compete in rates of differentiated loans, hold reserves against liquidity shocks and refinance in the interbank money market if shocks exceed individual reserves. Mergers can affect market...
- White papers 2002-04-23
- Liquidity Risk and Expected Stock Returns
- This study investigates whether market-wide liquidity is a state variable important for asset pricing. The author finds that expected stock returns are related cross-sectionally to the sensitivities of returns to fluctuations in aggregate liquidity. The monthly liquidity measure, an average of individual-stock measures estimated with daily data, relies on the...
- White papers 2001-08-13
- Measuring Market Liquidity
- From the executive summary: ‘Recent research has suggested that aggregate market liquidity varies over time and that the covariance of returns with innovations in market liquidity is priced. However, liquidity has multiple dimensions, which incorporate key elements of volume, time, and transaction costs. An ideal measure of market-wide liquidity should...
- White papers 2003-10-01
- Liquidity and Expected Returns: Lessons From Emerging Markets
- Given the cross-sectional and temporal variation in their liquidity, emerging equity markets provide an ideal setting to examine the impact of liquidity on expected returns. This paper considers a simple asset-pricing model with liquidity and the market portfolio as risk factors and transaction costs that are proportional to liquidity. The...
- White papers 2005-06-01
- Liquidity Commonality and Return Co-Movement
- This paper shows that liquidity commonality is due to co-movements in supply and demand induced by cross-sectional correlation in order types market and limit orders, while return commonality is caused by correlation in order flows order direction and size. Since return and liquidity commonality are caused by different economic forces,...
- White papers 2005-03-01
- NASDAQ launches Liquidity Tracker; Intelligent order routing system allows market participants to find and increase liquidity.
- M2 PRESSWIRE-5 December 2002-NASDAQ: NASDAQ launches Liquidity Tracker; Intelligent order routing system allows market participants to find and increase liquidityC1994-2002 M2 COMMUNICATIONS LTD RDATE:12052002 New York, N.Y -- The Nasdaq Stock Market, Inc. NASDAQ has launched a new product that provides...
- Research articles 2002-12-05
- Fundtech Introduces PAYplus Liquidity Manager™; Real-Time Multi-Currency, Multi-Bank System Automates Liquidity Management Processes to Improve Bank Profitability
- JERSEY CITY, N.J. -- Fundtech Ltd. (NASDAQ: FNDT), a leading provider of end-to-end corporate banking systems and services, today announced the introduction of PAYplus Liquidity Manager, a system that helps banks track and manage their global liquidity more accurately and in real time. PAYplus Liquidity Manager consolidates all positions into...
- Research articles 2005-08-10
- Concordia Maritime Appoints HQ Bank as Liquidity Provider
- STOCKHOLM, Sweden -- Regulatory News: Concordia Maritime AB publ (STO:CCORB) has entered into an agreement with HQ Bank AB according to which HQ Bank AB will act as liquidity provider as regards the company's share within the framework of OMX Nordic Exchange Stockholm AB's system for liquidity provision as...
- Research articles 2008-11-06
- Fire-Sale FDI and Liquidity Crises
- In placing capital market imperfections at the center of emerging market crises, the theoretical literature has associated a liquidity crisis with low foreign investment and the exit of investors from the crisis economy. However, a liquidity crisis is equally consistent with an inflow of foreign capital in the form of...
- White papers 2002-08-12
- Banks' Advantage in Hedging Liquidity Risk: Theory and Evidence from the Commercial Paper Market
- This paper argues that banks have a unique ability to hedge against market-wide liquidity shocks. Deposit inflows provide funding for loan demand shocks that follow declines in market liquidity. Consequently, one dimension of bank specialness' is that banks can insure firms against systematic declines in market liquidity at lower cost...
- White papers 2003-01-01
- Endogenous Liquidity In Asset Markets
- This article analyzes a model in which long-term risky assets are illiquid due to adverse selection. The degree of adverse selection and hence the liquidity of the assets are determined endogenously by the amount of trade for reasons other than private information. One find that higher productivity leads to increased...
- White papers 2003-01-01
