Liquidity Risk Definition
Liquidity Risk is the risk that arises from the difficulty of selling an asset. Illiquid assets such as real estates or artworks may face the risk that they cannot be sold at the desired time because of an insufficient market demand. If these assets have to be sold quickly, they may yield less than their fair value. In case of banks liquidity risk is a situation where the bank has not enough cash to meet the needs of depositors and borrowers.