what is a liquidity crisis 
a liquidity crisis is a financial situation characterized by a lack of cash or easily convertible to cash assets on hand across many businesses or financial institutions simultaneously in a liquidity crisis liquidity problems at individual institutions lead to an acute increase in demand and decrease in supply of liquidity and the resulting lack of available liquidity can lead to widespread defaults and even bankruptcies understanding a liquidity crisismaturity mismatching between assets and liabilities as well as a resulting lack of properly timed cash flow are typically at the root of a liquidity crisis liquidity problems can occur at a single institution but a true liquidity crisis usually refers to a simultaneous lack of liquidity across many institutions or an entire financial system single business liquidity problem