A key component of this system is a firm’s liquidity risk tolerance, which is the level of liquidity risk that the bank is willing to assume. There are several ways to express this risk tolerance, such as the percentage of total debt obligations not fully funded at a point in time.
http://www.frbsf.org/economic-research/publications/economic-letter/2008/october/liquidity-risk/
Asset securitization is a form of liquidity management carried out using asset sales, but it is different from the use of liquidity reserves. Securitization refers to the transformation of portfolios of on-balance-sheet loans, such as mortgages or credit card debt, into securities that are sold to outside investors.
http://www.frbsf.org/economic-research/publications/economic-letter/2008/october/liquidity-risk/
Liquidity is generally defined as the ability of a financial firm to meet its debt obligations without incurring unacceptably large losses. An example is a firm preferring to repay its outstanding one-month commercial paper obligations by issuing new commercial paper instead of by selling assets.
http://www.frbsf.org/economic-research/publications/economic-letter/2008/october/liquidity-risk/
Yet, their article--and Federal Reserve research generally--ignores what should be the focal points of bubble analysis: credit growth, speculative finance, marketplace liquidity, and various financial and economic distortions.
http://www.thefreedictionary.com/liquidity
Financial firms can meet their liquidity needs through several sources ranging from existing assets to debt obligations and equity. The most readily available is operating cash flows arising from interest and principal payments from existing assets, service fees, and the receipt of funds from various transactions.
http://www.frbsf.org/economic-research/publications/economic-letter/2008/october/liquidity-risk/
The ease with which an asset can be converted into money. Cash is perfectly liquid but shares in a company are less liquid because they must be sold first before money is obtained. Assets such as property are even less liquid because they are harder to sell than shares.
http://www.thefreedictionary.com/liquidity
The state of being liquid. 2. The quality of being readily convertible into cash: an investment with high liquidity. 3. Available cash or the capacity to obtain it on demand: a bank that is increasing its liquidity by shortening the average term of its loans.
http://www.thefreedictionary.com/liquidity
What is 'Liquidity Risk'. Liquidity risk is the risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss.
http://www.investopedia.com/terms/l/liquidityrisk.asp
Correspondingly, the firm’s senior management is responsible for developing and implementing a liquidity risk management strategy. The strategy should include specific policies on such issues as the composition of assets and liabilities, especially regarding maturity, and the diversity and stability of funding sources.
http://www.frbsf.org/economic-research/publications/economic-letter/2008/october/liquidity-risk/
In times of crisis, reductions in market liquidity and funding liquidity are mutually reinforcing, leading to a liquidity spiral. Brunnermeier and Pedersen's model links a security's market liquidity--that is, the ease of trading it--to traders' funding liquidity--that is, their availability of funds. com/) has announced the addition of Liquidity Black Holes: Understanding, Quantifying and Managing Financial Liquidity Risk to their offering.
http://www.thefreedictionary.com/liquidity
what is liquidity
Liquidity is defined as the ability of a financial firm to meet its debt obligations without incurring unacceptably large losses. Liquidity is the ability of a financial firm to meet its debt obligations without incurring unacceptably large losses.