Description

How banks meet their cash outflow needs. Looking at which assets are liquid, and how liquidity pressures can come about.

Learning Objectives

  1. Identify the key concepts of liquidity risk and how it differs from sources of funding such as capital.
  2. Compare liquid and illiquid assets, and analyze their impact on the liquidity risk of financial institutions.
  3. Analyze the roles of depositor funds, wholesale lending markets, capital markets, banking books, and trading books in the management of liquidity risk.
  4. Evaluate the impact of regulatory responses, such as Basel III, on liquidity risk management and their effectiveness in mitigating banking crises.