An Overview of Credit and Liquidity Risk Financial institutions often face multiple risks when investing in assets or issuing loans. Two of the most significant risks are credit risk and liquidity risk. Credit risk in trading is the possibility that a borrower may be unable to repay their debt, which can lead to significant losses for the lender. Liquidity risk is when a financial institution may not have the necessary funds to meet its financial obligations.  Financial institutions must manage these risks effectively to ensure continued financial stability. Effective risk…
Read MoreCredit Risk vs. Liquidity Risk: Differentiating Between Market Risks
