BANK LIQUIDITY – GOING CONCERN VS. GONE CONCERN

(RUSU) Aurica Pelin ()
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(RUSU) Aurica Pelin: Doctoral School of Finances, Bucharest University of Economic Studies, Bucharest, Romania

Annals of Faculty of Economics, 2020, vol. 1, issue 2, 223-228

Abstract: For most actors of the financial system, the liquidity in general and the bank liquidity in particular represents a stressful subject to discuss and even more stressful to manage. During the significant crises, especially the “modern era†ones, the liquidity issue became “the knot in the handkerchief†, the key element in handling the problem banks. Moreover, while liquidity management became an important area of banking activities during normal times (going concern), and the tools/models used for this purpose evolved consequently, under the new framework of banking resolution developed after the financial crisis of 2007-2009 in order to break the vicious circle between banks and sovereigns (the “Helsinki declaration†), the problem of ensuring liquidity for continuing the critical activities/functions, if any, of banks under resolution, and thus obviating the negative impact on financial stability, appeared not to have been addressed enough by the new framework. Thus, currently, the subject of liquidity in resolution and resolution funding prompted a significant amount of interest, the researchers being expected to provide thoughtful insight as a valuable support for policy makers and legislators.

Keywords: liquidity; bank liquidity; bank resolution; contingency funding; resolution funding (search for similar items in EconPapers)
JEL-codes: G01 G33 G38 (search for similar items in EconPapers)
Date: 2020
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