When depositors demand cash while financial institutions have - TopicsExpress



          

When depositors demand cash while financial institutions have large portfolios of government bonds and real estate loans, especially banks are exposed to liquidity risk in the face of sudden withdrawals or non-renewals of liability claims. Large transactions in this asset class, which can be turn into cash quickly and at low transaction costs with little or no loss in principal value, do not move the market price or move it very little.
Posted on: Wed, 06 Nov 2013 18:23:18 +0000

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