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Quantitative Finance · Begrippenlijst

Wat is Liquidity spiral?

Definition 31.3 Markets I: The Ecosystem and Exchange-Traded Markets · Hoofdstuk 31 — Stress Case Studies

A liquidity spiral is a loop in which falling prices reduce the capacity of intermediaries to hold positions (through losses, margin calls, risk limits or uncertainty about the validity of their trades), their withdrawal reduces depth, and reduced depth makes the same flow move prices further.

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