Definitions for "Liquidity Preference"
the public's demand for money in cash or current bank accounts; money which is saved rather than spent or lent.
(1) A desire among some holders of financial instruments to keep some or all of their funds in liquid instruments, that is, instruments that either mature in a short period of time or that can be readily sold with small risk of loss. (2) A theory that attempts to explain the shape of yield curves. Under the liquidity preference hypothesis, the shape of yield curves is determined by the collective expectations of investors (the expectations hypothesis and implied forward rates) but with an upward bias at least for short- term rates caused by investors' preferences for liquidity.
The desire for investors, other things being equal, to hold liquid assets, i.e. cash, rather than bonds or stocks Within a single asset class, it describes an investors' preference for more marketable issues.