Liquidity risk

Author: (USA) Banks
Publisher:
Publish Date: 2005-06-01
Features: Liquidity risk refers to the risk of loss due to the inability to obtain cash and cash equivalents. More specifically, it is the risk of incurring losses due to the inability to raise funds economically, or to sell or mortgage assets at book value to repay expected or unexpected debts. Fundamentally, liquidity risk is the risk of economic loss incurred in order to secure cash, which is crucial for the continued operation of a business. This book analyzes the issue of liquidity risk and explores the topic from many theoretical and practical perspectives.
Part 1 discusses various aspects of corporate liquidity. It first analyzes the role of liquidity in the financial operations of modern companies, then examines traditional sources of assets and liabilities, as well as off-balance-sheet liquidity issues.
Part 2 analyzes the nature of liquidity risk, exploring both financing liquidity risk and asset liquidity risk, and discusses assets, financing, and liquidity risk. It delves into the theoretical nature of liquidity, involving volatility, losses, and bankruptcy. This section also provides many "real-life" case studies on liquidity crises.
Part 3 shifts focus to the management and control of liquidity risk arising from liquidity issues. It focuses on methods for measuring liquidity risk in practice, describes methods for managing and monitoring liquidity risk, and discusses the characteristics and benefits of liquidity crisis plans. Finally, it summarizes the book's ideas and offers guidance on addressing future challenges.