Bank Liquidity Risk Metrics

Bank Liquidity Risk Metrics

It is essential that banks use a range of liquidity measures for risk estimation and forecasting. Here, Moorad details the range of liquidity metrics that are employed by banks, looking beyond what is required under regulators’ rules.
Overview

Liquidity risk metrics are crucial for regulatory purposes and internal purposes. Managers must have a grasp on their liquidity profile in order to make the correct operational decisions for shareholders. At the same time, they must ensure they are adhering to the requirements set by the Basel Committee.

Key learning objectives:

  • Define the different liquidity risk metrics

  • Understand the importance of these metrics

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