An investor ponders between gold coins (illiquid assets) and cash (liquid assets), symbolizing Liquidity Preference Theory's impact on investment decisions.

Understanding Liquidity Preference Theory: A Comprehensive Guide for Institutional Investors

Introduction to Liquidity Preference Theory John Maynard Keynes, an influential economist, introduced the concept of Liquidity Preference Theory in his seminal book, The General Theory of Employment, Interest, and Money, published in 1936. This theory deals with investors’ demand for money, particularly in relation to their holdings in various types

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