Franchise viability risk: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Classify page.) |
imported>Doug Williamson (Update links.) |
||
| Line 20: | Line 20: | ||
* [[Funding liquidity risk]] | * [[Funding liquidity risk]] | ||
* [[Funding risk]] | * [[Funding risk]] | ||
* [[ | * [[Internal Liquidity Adequacy Assessment Process]] (ILAAP) | ||
* [[Liquidity]] | * [[Liquidity]] | ||
* [[Liquidity Coverage Ratio]] | * [[Liquidity Coverage Ratio]] | ||
Revision as of 22:40, 29 January 2022
Liquidity risk - banking.
Franchise viability risk arises when a firm takes actions, despite having no legal obligation to do so, in order to preserve its reputation, and where these actions cause unforeseen liquidity outflows.
Failing to take these actions may damage the firm’s franchise, which could impede access to wholesale markets or cause significant outflows.
The associated outflows are uncertain before the event, as there is no associated contractual obligation.
An example is agreeing to requests from debt investors to buy back debt immediately, before its contractual maturity.
Sometimes abbreviated to franchise risk.
