Definition
Before the global financial crisis (GFC), liquidity risk was not on everybody's radar. Financial models routinely omitted liquidity risk. But the GFC prompted a renewal to understand liquidity risk. One reason was a consensus that the crisis included a run on the non-depository, shadow banking system—providers of short-term financing, notably in the repo market—systematically withdrew liquidity.
In Panel Profits
In the Panel Profits market platform, Understanding Liquidity Risk applies standard equities & market mechanics principles to comic assets and physical collections. Trading volume and liquidity spreads reflect secondary market dealer and auction transactions.
Common mistakes
Do not infer unobserved prices.