Meaning

noun the state in which a substance exhibits a characteristic readiness to flow with little or no tendency to disperse and relatively high incompressibility

noun the property of flowing easily

noun being in cash or easily convertible to cash; debt paying ability

originFrom liquid + -ity, from Latin liquiditas. In their financial and economic senses, this and various associated terms all involve portraying assets figuratively as if they were liquids and solids, dissolving the solids with solvents, freezing and thawing, and so on.

Etymology from Wiktionary, CC BY-SA 3.0