Liquidity Crisis and Ratio Analysis
Introduction
Liquidity crisis is the most talked topic in financial markets and institution today. Because of liquidity crisis many countries are facing recession in their country. The impact of liquidity crisis has affected all over the world and also in Bangladesh.
Here the term liquidity means the ability to sell assets easily or get back the value of investment in cash immediately without loss of value. On the other hand liquidity crisis is a negative financial situation characterized by a lack of cash flow. It reflects a fall in asset prices below their long run fundamental price; or deterioration in external financing conditions; or a reduction in the number of market participants or simply difficulty in trading assets.
The financial crisis of 2007–2008, known as the global financial crisis and 2008 financial crisis, is considered by many economists to be the worst financial crisis. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. Many causes for the financial crisis have been suggested, with varying weight assigned by experts. Mainly the burst of U.S. housing loan is responsible for the crisis. Other things such as high risk, complex financial products, undisclosed conflicts of interest, and the failure of regulators, the credit rating agencies, and the market itself were responsible for this.
Impact of liquidity crisis has spread all over the world as a result of high communication and international trade & finance. So many countries have taken step against this crisis and Bangladesh has also taken some steps to prevent liquidity crisis. Not only countries but also the central banks and commercial banks have also taken some necessary procedures to reduce the effect of liquidity crisis. Through these steps banks
Liquidity crisis is the most talked topic in financial markets and institution today. Because of liquidity crisis many countries are facing recession in their country. The impact of liquidity crisis has affected all over the world and also in Bangladesh.
Here the term liquidity means the ability to sell assets easily or get back the value of investment in cash immediately without loss of value. On the other hand liquidity crisis is a negative financial situation characterized by a lack of cash flow. It reflects a fall in asset prices below their long run fundamental price; or deterioration in external financing conditions; or a reduction in the number of market participants or simply difficulty in trading assets.
The financial crisis of 2007–2008, known as the global financial crisis and 2008 financial crisis, is considered by many economists to be the worst financial crisis. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. Many causes for the financial crisis have been suggested, with varying weight assigned by experts. Mainly the burst of U.S. housing loan is responsible for the crisis. Other things such as high risk, complex financial products, undisclosed conflicts of interest, and the failure of regulators, the credit rating agencies, and the market itself were responsible for this.
Impact of liquidity crisis has spread all over the world as a result of high communication and international trade & finance. So many countries have taken step against this crisis and Bangladesh has also taken some steps to prevent liquidity crisis. Not only countries but also the central banks and commercial banks have also taken some necessary procedures to reduce the effect of liquidity crisis. Through these steps banks