Liquidity risk analysis at financial-banking institutions

Constantin Anghelache and Gyorgy Bodo
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Constantin Anghelache: Bucharest University of Economic Studies / „Artifex” University of Bucharest
Gyorgy Bodo: Bucharest University of Economic Studies

Romanian Statistical Review Supplement, 2018, vol. 66, issue 1, 65-73

Abstract: In the banking system, in the context of total risk and risk categories, liquidity risk is a very important one. The ability to initiate financial operations and to complete them in the short term with minimal costs and high profitability depends on the liquidity of the financial and banking institution concerned. The liquidity risk, being considered as the probability of loss, partial or total, of the financing capacity, can have important negative effects. Bank liquidity elements can be identified, known and based on valuation indicators to determine the liquidity risk, such as intensity, depth and duration. In this respect, in bank management, special attention must be paid to identifying the premises for its occurrence and, in this way, to provide for measures to prevent or, at least, to limit the effects of liquidity risk. Indicators, such as liquidity ratio, liquidity index, loan / deposit ratio, and others, offer the ability to permanently monitor the degree of liquidity, on the basis of which the prospect of liquidity risk may be identified. Of all the banking risks, liquidity has the most profound and immediate effects on the stability of the bank considered.

Keywords: banking risk; bank liquidity; liquidity rate; banking management; GAP (search for similar items in EconPapers)
JEL-codes: G21 G33 (search for similar items in EconPapers)
Date: 2018
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