Read full paper at: http://www.scirp.org/journal/PaperInformation.aspx?PaperID=50168#.VDSjJVfHRK0 Author(s) Thomas Stern Affiliation(s) Austrian Financial Market Authorities (FMA), Vienna/Wien, Austria . ABSTRACT During an early phase of the financial crisis (2007), many financial institutions — in spite of adequate capital levels — faced heavy difficulties because they didn’t manage their liquidity profile in a prudent manner. Suddenly the crisis reminded the respective sector on the importance of liquidity to the proper functioning of financial markets. In front of the times of crisis, asset markets were broad and deep, funding was readily available at low cost. The quick change in market conditions showed how fast liquidity can dry ...
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