In the modern parlance, a liquidity trap occurs when

banks do not have enough cash to lend which means that low interest rates do not stimulate the economy.
banks cannot find any credit-worthy borrowers which means that low interest rates do not stimulate the economy.
banks have excess reserves from budget deficits which means low interest rates do not stimulate the economy.

Answer: banks cannot find any credit-worthy borrowers which means that low interest rates do not stimulate the economy.

Please read Balance sheet recessions and democracy for more information or post a comment if you are unsure.