PhD Studentship – This project has now been completed but reviewed the ways in which different types of liquidity affect the operations of a bank and the extent to which various regulatory requirements add additional constraints to the operations of banks

The issue of liquidity, both in connection with pricing the obligations of a bank and in managing its risk, has attracted significant attention from regulators and the management of banks themselves. 

Regulators have had to look at how liquidity risks affect both the individual banks and the financial system and are designing reporting requirements and capital adequacy obligations that (will) have a major effect on the operation and strategic direction of bank activities. 

Such obligations have started to take into account the interconnectedness of the bank within the system, its own sensitivity within that network to liquidity constraints caused by other banks and the impact the bank itself would have on the network if it were to run into liquidity constraints. One example of the new regulatory requirements is the Liquidity Coverage Ratio being introduced in Basel III and the impact of this is being discussed throughout the banking sector.

The research extended to developing a model for how banks can comply with various types of regulatory constraint and reporting requirements and steer their balance sheets and operations in a way that achieve business objectives

ARC research project: Banking Liquidity Risk
ARC scholar:  Iain Ritchie
University:  Heriot Watt University 
Period of research:  September 2012 – November 2016
This project has now been completed
Industry sponsors:  Hymans Robertson
​Academic supervisors:    Andrew Cairns, Alex McNeil
Outputs:

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