Why do financial firms often face significant liquidity problems?
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(1) A maturity mismatch situation in which most depository institutions hold an unusually high proportion of liabilities subject to immediate payment, especially demand (checkable) deposits and money market borrowings;
(2) The sensitivity of ...
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Explanation:
Financial institutions are prone to liquidity management problems due to a maturity mismatch situation in which most depository institutions hold an unusually high proportion of liabilities subject to immediate payment, especially demand (checkable) deposits and money market borrowings .
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