An Examination of Liquidity Risk of Standard Chartered Bank

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ACKNOWLEDGEMENT

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DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with university.

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Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER 01: INTRODUCTION1

Background of the Research1

Liquidity Risk Management2

Aims and Objectives3

Research Questions3

Rationale of the Research4

Significance of the Study5

Background of Standard Chartered Bank5

CHAPTER 2: LITERATURE REVIEW7

Liquidity7

Liquidity Risk8

Management of Liquidity Risk9

Liquidity Risks in Banks11

CHAPTER 3: METHODOLOGY14

Research Methodology14

Research Design15

Rationale for Chosen Methodology17

Data Collection18

REFERENCES20

CHAPTER 01: INTRODUCTION

Background of the Research

Liquidity risk is the result of transformation of the role of a bank whose term of employment is generally higher at the end of resources, processing inherent in banking. It applies to financial investments that are difficult to liquidate (that is to say, for sale) very quickly. This does not prevent processing but can be assessed in the event of a liquidity crisis and given the schedule of assets and liabilities, how long and at what price the bank will honour its commitments. This question has two aspects, the measurement of liquidity risk and its management (Wahlen 1994, 455).

Markets, in times of market stress, liquidity in a race can occur, and investors who have taken an important liquidity risk may suffer capital losses. For banks, the banks are mainly short-term deposits of their customers and make loans to medium and long term. Therefore, it can create a gap between the money lent and the amount available (deposits), the latter may be insufficient. In this case, we talk about the lack of liquidity.

Lucas and McDonald (1992) had defined the concept of liquidity risk as the current and potential risk of the inability of the capital or the earnings of a bank's to fulfill its duties, whenever they are due. The measure of liquidity risk includes the failure of the bank to handle unintentional reductions or alterations in the sources of funds. Klein (2001, 205) had made an opinion that liquidity risk can is also impacted by the failure of a bank to make out or deal with the changes in conditions of the market, which could make an impact on the capability of a bank to pay off assets rapidly and with the minimum amount of loss in the market value of the assets (Klein, 2001, 205).

Liquidity Risk Management

Liquidity risk management in banks is the ability of the bank to maintain adequate liquidity, which often depends on how the market perceives the bank's financial strength. If his condition seems to deteriorate, usually because of significant losses incurred in connection with loans, there is a need for emergency ...