Liquidity Risk and Bank Portfolio Financial Essay




1 Introduction. This article examines the link between banks' liquidity creation and systemic risk. The process of creating liquidity by converting liquid deposits into illiquid assets is one of the central roles of banks in the economy Bhattacharya and Thakor, 1993, Berger and Bouwman, 2009, Berger and Sedunov, ~ Portfolio: A portfolio is a group of financial assets such as such as stocks, bonds and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed-end funds. ~ Investopedia is the world's largest source of online financial content, ranging from market news to retirement strategies, from investment education to advisor insights. According to financial intermediation theory, banks play a crucial role in mobilizing and redistributing social capital. the use of liquid liabilities to finance illiquid assets, thus providing liquidity to the market. China, the crucial role of banks in macroeconomic regulation and the prevention of economic risks is further strengthened. Banks represent important issues in business, with dominant positions in the world's financial system. Banks have developed various financial products and services that can meet most market needs. As a result of adequate portfolio diversifications, banks achieved positive profitability figures. Besides adapted, 1. Introduction. In the MENA countries of the Middle East and North Africa, banks are the main providers of financial services as the economies have bank-based financial systems. Therefore, having vibrant banks is critical for the MENA region as underperforming banks or a failing bank. the banking sector influences the, Summary and Figures. This study examines the effect of liquidity management on the financial performance of banks in Nigeria for The study uses secondary data from five banks. Potential losses due to high credit risk can jeopardize a bank's solvency. Following the global financial crisis, the importance of applying prudent risk management practices has become much greater. Purpose The credit crisis and the recent COVID-19 underlined the importance of liquidity and credit risk management in companies and financial institutions. Portfolio liquidity risk management. Liquidity risk imposes costs associated with holding investor capital for an uncertain duration. Large institutional investors must plan their portfolio liquidity to maximize fund efficiency. For example, an endowment that provides student loans may need to distribute funds at a specific time,





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