Sources of Liquidity

Abstract

As we consider liquidity risks and the challenges that can arise from an asset and funding perspective, it is helpful to begin by analyzing sources of liquidity that firms from a broad range of industries can access in support of their operations. This provides an understanding of how liquidity structure must be managed to ensure availability of cash resources when needed. In this chapter we review sources of liquidity found in the asset and liability accounts of the balance sheet, as well as those that exist off-balance sheet. We also discuss the amalgamated picture of liquidity, in both theoretical and actual terms.