Coordinating Credit Risk and Liquidity Management in Commercial Banks
DOI:
https://doi.org/10.54097/5qbdp261Keywords:
Credit risk, Liquidity risk, Risk coordination, Basel III, Asset-liability management, Stress testing, Systemic riskAbstract
Commercial Banks, at the crossroads of two core risks: Credit Risk and Liquidity Risk, interact dynamically within their own systems that do not reflect this interrelation among multiple factors explicitly. Based on this, it examines the interaction between credit loss and liquidity pressure; And explore the regulatory collaboration system of institutional stakeholders and market participants in response to such problems. Based on the theoretical framework of Basel III, the empirical lesson from the 2008 global financial crisis and the 2023 regional banking stress in the United States, this article analyses how to link integrated risk governance, stress testing, and asset-liability management committees to overcome the operation gap of credit and liquidity functions. Consideration is given to both institutional obstacles in achieving coordination and the consequences of digitalization on risk data aggregation issues. Based on this, good communication is no longer lacking because of bad administration; rather, it should come into being orderly in a reasonable way as an institution or regulation improves.
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