Funding liquidity risk is the risk that a firm cannot meet its payments and margin calls when they fall due, because its lenders raise haircuts, shorten terms or withdraw, or because its own losses consume its cash. Market liquidity risk is the risk that a firm cannot sell or hedge a position quickly without moving its price against itself, because the position is large against the market’s volume or because other holders are selling at the same time.
Quantitative Finance · Glossary
What is Funding liquidity risk, market liquidity risk?
Also known as: funding liquidity risk · market liquidity risk