Home » Eng Finance » L » Liquidity preference

Liquidity preference

The desire to hold money rather than other forms of wealth, e.g. stocks and bonds. It can be thought of as stemming from the transactions motive, speculative motive and precautionary motive for holding money, and so will be influenced by the levels of income and wealth, rates of interest, expectations and the institutional features of the economy which determine the income velocity of circulation.

Reference: The Penguin Dictionary of Economics, 3rd edt.