Liquidity risk

Abstract

Liquidity manifests itself as the ability of a, to have, at its disposal, sufficient working capital to continue with its current business activities. Liquidity risk is among leading financial risks in banking and it is extremely important because the liquidity of a bank is considered to be one of the most basic conditions of banking in modern market economies. A bank must be ready to settle all obligations towards its clients and depositors at all times, and if this is not the case, the bank is in trouble. Bank illiquidity can lead to a collapse from which it can be concluded that it is very important to adequately manage the liquidity risk and, in this way, try to reduce its negative effects.

Keywords

• liquidity
• risk
• bank
• business