Financial Regulation and Liquidity Risk Management

Andria Merwe

Chapter 6 in Market Liquidity Risk, 2015, pp 143-162 from Palgrave Macmillan

Abstract: Abstract The celebrated author Peter Bernstein explained in his book Capital Ideas: The Improbable Origins of Modern Wall Street, “Without the stock market, the market for corporate ownership would be like the market for houses. Agents have to advertise or use some cumbersome method of finding the other side of the deal. Real estate agents earn commissions of 6% or more, while the commission on a typical stock transaction is less than 1%. After the house has been sold, only the principles and their close friends know what the price was.”1 The increased marketability of financial instruments and the transferability of risks have been one of the major features of the modernization of the financial system and our increased reliance on a liquid market for smooth operation of the financial system.

Keywords: Credit Risk; Hedge Fund; Liquidity Risk; Market Liquidity; Basel Committee (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-38923-7_6

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DOI: 10.1057/9781137389237_6

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