Liquidity Risk Management in Post-Crisis Conditions

Liquidity risk management, often called "water of life" in the banking system needs to be addressed by banks with more rigors, given the current financial environment. This implies a better diversification of the funding sources, longer average debt maturities in order to reduce some gaps between assets and liabilities, creating liquidity reserves based on immediately attainable assets. This paper focuses on stress-testing scenarios, performing an empirical study on tracking and limiting liquidity risk in Romania compared to the European banking system, starting from the premise that one of the most important elements of the financial crisis is the liquidity crisis in the credit institutions. The paper presents a selection and analysis of measures to improve the crisis and not least, the implementation of liquidity scenarios, applicable to the various stages of the crisis. (C) 2015 The Authors. Published by Elsevier B.V.