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- The repercussions of unmanaged or poorly managed liquidity risk can be severe and far-reaching. It can lead to financial losses from selling assets at depressed prices, operational disruptions due to inadequate cash flow, and reputational damage that can further exacerbate liquidity issues.
www.investopedia.com/terms/l/liquidityrisk.aspUnderstanding Liquidity Risk in Banks and ... - Investopedia
Aug 22, 2024 · The repercussions of unmanaged or poorly managed liquidity risk can be severe and far-reaching. It can lead to financial losses from selling assets at depressed prices, operational...
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Dec 31, 2023 · Unmanaged or poorly managed liquidity risk can lead to financial losses, operational disruptions, reputational damage, and even insolvency or bankruptcy, emphasizing the importance of robust liquidity risk management practices.
May 3, 2023 · However, leaving liquidity risk unmanaged could result in a scenario where reduced access to funding jeopardizes the viability, or reputation of the firm and could result in customers moving to other providers.
These new global standards encourage banks to manage their liquidity positions more prudently, giving market participants greater confidence in the ability of the banking sector to withstand periods of stress, and, hence, lowering the probability of acute shortfalls in liquidity.
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Sep 25, 2008 · Liquidity risk management is of paramount importance because a liquidity shortfall at a single institution can have system-wide repercussions. Financial market developments in the past decade have increased the complexity of liquidity risk and its management.
Poor management of liquidity risk can lead to undue financing costs and difficulty liquidating assets at fair value. This risk may be greater if a financial institution’s reputation is damaged.
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Liquidity risk refers to how a bank’s inability to meet its obligations (whether real or perceived) threatens its financial position or existence. Institutions manage their liquidity risk through effective asset liability management (ALM).
