THE LIQUIDITY RISK IMPACT ON THE ENTITIES ACTIVATING ON CAPITAL MARKETS

Ciprian-Dan Costea
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Ciprian-Dan Costea: The West University of Timisoara, Postdoctoral Researcher

Management Intercultural, 2014, issue 31, 97-103

Abstract: The activity of the entities activating on capital markets is exposed directly to liquidity risk. When we approach this type of entities the liquidity risk has two main components: (a) the internal liquidity risk, which refers to the possibility that the financing capacity and largely, the cash flow of a specific enterprise that acts on capital markets, to be affected; (b) the market liquidity risk that covers the capacity of reselling financial assets on capital markets. Even though, during the time, these two components of liquidity risk were approached independently, recent studies consider them interdependent. We want to emphasize with this study that in the actual framework of capital markets the two components of liquidity risk should always be analyzed together, in order to provide the best premises for decision makers.

Keywords: Internal liquidity risk; Market liquidity risk; Capital markets; Financial assets; Cash flow (search for similar items in EconPapers)
JEL-codes: G20 G32 (search for similar items in EconPapers)
Date: 2014
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