In financial economics, liquidity is a catch-all term that may refer to several different yet closely related concepts. Among other things, it may refer to Asset Market liquidity (the ease with which an asset can be converted into a liquid medium e.g. cash); Funding liquidity (the ease with which borrowers can obtain external funding) Balance Sheet or Accounting liquidity (the health of an institution’s balance sheet measured in terms of its cash-like assets).
Liquidity crisis typically refers to the funding liquidity crisis when borrowings from the lenders such as banks and other institutions become difficult due to severe eligibility requirements or very high risk averseness. On a firm level, a liquidity crisis can also refer to the company not being able to meet its obligations if cash inflows are insufficient or not timely.