Liquidity Risk Management Case Study

1262 Words6 Pages
Introduction By country goals, achieve sustained economic growth and development that require additional resources is good governance and the proper relationship between financial systems and the production of the most important factors for economic growth and development in each country. Mobilization and allocation of resources for investment in economic activities carried out by the financial market that the market for bank credit is a part of this market. The largest volume of economic transactions through the banking system and proper functioning of the banking system achieved a decisive role in economic activity will improve. Banking sector as mainly financial system and the heart of the economy of any country, plays a vital role in the…show more content…
The main challenge for liquidity risk management, funding in times of crisis is the main reason for this problem is that most of the banks from short-term deposits funded. In addition to the facilities granted by banks to invest in assets that have a relatively low degree of liquidity. Maintaining an optimal level of liquidity, one of the main tasks of banks and ignoring it will increase bank liquidity risk. The main task of the bank to balance the short-term financial obligations and long-term investments. Liquidity risk is mixed with other financial risks and therefore it is difficult to measure and control. In more recent years, bank failures due to insufficient attention to liquidity risk and as a result, depositors and investors' confidence in the ability of the Bank to repay their…show more content…
The occurrence of banking crises for reasons such as the escape of deposits, an increase in bad loans, recession and so impairs regulation of financial markets and provides background bankruptcy of many banks (Shayan Arani, 1380). Whereas banking risks on the effect. Further negative; therefore the role of integrated risk management of financial institutions revealed integrated risk management process that enables a bank to simultaneously measure and manage all their risks. Due to the financial crisis emerged in modern societies, the importance of the relationship between risks and their impact on each other and, ultimately, the banks and financial institutions, has been doubled. But among banks and financial institutions threatens mountain risks, credit risk due to the focus, the volume of operations, particularly its sensitivity, is the most important risk. An efficient banks by taking all the risk factors are present at the same time risk control, risk management and quantitative methods to identify and control the various risks in the bank's

More about Liquidity Risk Management Case Study

Open Document