{"id":26062,"date":"2013-05-18T11:14:36","date_gmt":"2013-05-18T05:44:36","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=26062"},"modified":"2024-04-12T14:18:31","modified_gmt":"2024-04-12T08:48:31","slug":"liquidity-risk","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk\/","title":{"rendered":"Liquidity Risk"},"content":{"rendered":"\n
\"Liquidity<\/a><\/figure><\/div>\n\n\n

\u00a0<\/p>\n

Liquidity Risk- Liquidity refers to the ease with which an\u00a0asset, or\u00a0security, can be converted into ready cash without affecting its\u00a0market price. Liquidity is a bank\u2019s capacity to fund an increase in assets and meet both expected and unexpected cash and collateral obligations at a reasonable cost and without incurring unacceptable losses. Liquidity risk is the inability of a bank to meet such obligations as they become due, without adversely affecting the bank\u2019s financial condition. Effective liquidity risk management helps ensure a bank\u2019s ability to meet its obligations as they fall due and reduces the probability of an adverse situation developing. This assumes significance on account of the fact that liquidity crisis, even at a single institution, can have systemic implications.<\/p>\n

Market liquidity refers to the extent to which a\u00a0market, such as a country\u2019s stock market or a city\u2019s real estate market, allows assets to be bought and sold at stable, transparent prices. In the example above, the market for refrigerators in exchange for rare books is so illiquid that, for all intents and purposes, it does not exist.<\/p>\n

Although liquidity risk is inherent in the banking business, given the maturity transformation between assets and liabilities, it has not been explicitly addressed in a regulatory framework until recently under Basel III (measured with the Liquidity Coverage Ratio and Net Stable Funding Ratio) or the Comprehensive Liquidity Assessment Review (CLAR), as a part of the Dodd-Frank Act Stress Tests (DFAST) in the US.<\/p>\n

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Apply for Commercial Banker Certification Now!!<\/h5>\n

http:\/\/www.vskills.in\/certification\/Certified-Commercial-Banker<\/a><\/p>\n<\/div>\n\n\n

\"\"<\/a><\/figure><\/div>\n","protected":false},"excerpt":{"rendered":"

\u00a0 Liquidity Risk- Liquidity refers to the ease with which an\u00a0asset, or\u00a0security, can be converted into ready cash without affecting its\u00a0market price. Liquidity is a bank\u2019s capacity to fund an increase in assets and meet both expected and unexpected cash and collateral obligations at a reasonable cost and without incurring unacceptable losses. Liquidity risk is…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[3342],"tags":[9763,9766,9764,9765,9767,3405],"class_list":["post-26062","page","type-page","status-publish","hentry","category-commercial-banking","tag-certified-commercial-banker","tag-certified-commercial-banker-course-outline","tag-certified-commercial-banker-exam-details","tag-certified-commercial-banker-free-practice-test","tag-certified-commercial-banker-tutorial","tag-liquidity-risk"],"acf":[],"yoast_head":"\nLiquidity Risk - Tutorial<\/title>\n<meta name=\"description\" content=\"Liquidity Risk. Government of India Certification for commercial banker. Get Certified and improve employability. 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