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2007•SSRN Electronic JournalOpen access

The Dynamic Measures of Financial Liquidity

Grzegorz Marek Michalski

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Abstract

Firms hold liquidity for a variety of different reasons. Generally, liquidity balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold liquidity to hedge against it. Second, liquidity balances are held to use chances that are created by the positive part of the risk equation. Next, liquidity balances are the result of the operating needs of the firm. The correct liquidity management is addicted to this, whether the management of the firm knows how much it has. An object of the article they are dynamical measures of financial liquidity.

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What this paper is about

Firms hold liquidity for a variety of different reasons. Generally, liquidity balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold liquidity to hedge against it. Second, liquidity balances are held to use chances that are created by the positive part of the risk equation. Next, liquidity balances are the result of the operating needs of the firm. The correct liquidity management is addicted to this, whether the management of the firm knows how much it has. An object of the article they are dynamical measures of financial liquidity.

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Available abstract

Firms hold liquidity for a variety of different reasons. Generally, liquidity balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold liquidity to hedge against it. Second, liquidity balances are held to use chances that are created by the positive part of the risk equation. Next, liquidity balances are the result of the operating needs of the firm. The correct liquidity management is addicted to this, whether the management of the firm knows how much it has. An object of the article they are dynamical measures of financial liquidity.

Key concepts: Market liquidity, Liquidity risk, Accounting liquidity, Liquidity crisis, Liquidity premium, Liquidity trap, Business, Hedge

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