| Abstract | ABSTRACT
Banks and other financial organizations are a country's economic foundation in the modern
world. For all monetary issues, everyone from all social classes count on banks and other
financial organizations. For all banks and other financial institutions to maintain serving
their clients' needs and desires, they must run efficiently. Numerous causes contribute to the
damage imposed against this economic backbone. Liquidity risk is one such element.
Liquidity risk is an important issue for all financial institutions and is currently one of the
primary causes of bankruptcy for banks. How well a bank predicts its liquidity needs will
determine how successful it is. Effective management of liquidity is essential to banks'
ability to function. For any bank, liquidity is an essential component. Each bank is required
to maintain a certain level of liquidity. It must not be excessively or quietly expressed.
While insufficient liquidity results in the cessation of bank operations, too much liquidity
fosters the buildup of ideal funds, which can give rise to speculation, unjustified credit term
extensions, generous dividend policies, and lower profitability. By employing sophisticated
approaches to mitigate liquidity risk, banks can function productively by preserving a
healthy equilibrium between these two polar opposites. Over the past few years, effective
liquidity management has been growing in significance.
Keywords: Liquidity Risk, Uncertainty, Management Strategies, Financial Obligations.
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