Liquidity Risk and Liquidity Management Role

The aim of this paper is the analysis of liquidity management policy in order to determine the level of liquidity risk. Planning of liquidity requirements is important from the microeconomic aspect, because the banks at any moment must respond to requests submitted by depositors or applications for new loans. Provision of liquidity is also required from the macroeconomic aspect, since this reflects the economic and financial stability. Quantitative data for this study were collected using a questionnaire designed to analyse liquidity risk management, which would help in the identification and explanation of possible changes in the banking system in the country. Based on the analysis, it is estimated that banks properly manage liquidity and maintain adequate liquidity reserves to ensure sufficient funds to meet their commitments on time. Also, the main sources providing liquidity for banks are the non-term deposits and the issuance of various securities. However, holding excess liquidity reserves causes the opportunity cost for banks, but also non-fulfilment of the requirements of the economy for loans. Therefore, the regulatory bodies should reduce the liquidity reserve holding.