Franchise viability risk and Market liquidity risk: Difference between pages

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''Liquidity risk - banking.''
Market liquidity risk refers to the risk that market transactions will become difficult or impossible due to market disruptions or inadequate market depth.


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.  
Contrasted with, though also overlapping, funding liquidity risk.


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.''




== See also ==
== See also ==
* [[Bank]]
*[[Liquidity risk]]
* [[Franchise]]
*[[Funding liquidity risk]]
* [[Funding]]
*[[Guide to risk management]]
* [[Funding liquidity risk]]
* [[Funding risk]]
* [[ILAA]]
* [[ILAAP]]
* [[Liquidity]]
* [[Liquidity Coverage Ratio]]
* [[Maturity mismatch]]
* [[OLAR]]
* [[Prudential Regulation Authority]]
* [[Reputational risk]]


[[Category:Identify_and_assess_risks]]
[[Category:Financial_management]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Liquidity_management]]

Revision as of 13:12, 3 May 2015

Market liquidity risk refers to the risk that market transactions will become difficult or impossible due to market disruptions or inadequate market depth.

Contrasted with, though also overlapping, funding liquidity risk.


See also

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