Modern liquidity management technologies contain two main approaches: a bank or an enterprise must have a stock of liquid assets, or be able to quickly attract them. This alternative is manifested in the allocation in it of liquidity- “stock” (stationary liquidity) and liquidity- “flow” (a dynamic value that characterizes current liquidity). Liquidity analysis allows us to conclude that these approaches, strategies and methods of liquidity management in practice are quite effective.
The liquidity analysis of an insurance company, bank or enterprise aims to adequately assess the creditworthiness of a bank or the solvency of an enterprise and the ability to guarantee the fulfillment of financial obligations to partners. In its most general form, it presents a comparison of funds that are classified and grouped in descending order of their degree of liquidity.
Liquidity analysis shows that all assets should be classified into four groups:
1. The most liquid - used for predominantly current settlements.
2. Quickly sold assets - payments that occur within 1 year, for example, receivables.
3. Slowly realized - payments that will be made later than 1 year.
4. Hard to implement - used for a long period.
The first three can be constantly changing, and therefore more liquid.
In modern society, banks in their functional significance, the banking system can be compared with the circulatory system of the body.
By attracting funds, banks assume responsibility for observing the interests of depositors. The latter are interested so that the capital entrusted to the bank does not suffer. Based on this, banks should have all the capabilities to fulfill obligations by a specific date, without losing part of their income. This ability of the bank is characterized by the definition of bank liquidity.
Recent events in global financial markets, liquidity analysis, have confirmed the need to improve the banking segment in close connection with the restructuring of the economy.
From the very beginning of the crisis in the global economy, the Central Bank did not predict strong negative consequences. It was assumed that only an indirect effect would occur through an increase in the prices of financial resources when borrowing in foreign markets and a decrease in the resources of non-residents. But even this scenario, which is quite favorable in the opinion of the leadership of our central bank, carried a significant increase in the risk of bank liquidity.
However, if damage to the stability of the banking sector was not caused from the outside, then it arose from within the economic system. The state and results of banks' activities largely depend on the conditions in which they have to work. The grave crisis consequences in various sectors of the economy, which depend heavily on partnership with Europe, could not but affect the banking system. The volume of services sold decreased, there was a strong outflow of resources, the share of bad loans increased sharply, banks experienced a shortage of liquidity. It was then, and precisely thanks to the support of the Central Bank, that it was possible to minimize the negative consequences for commercial banks.
As a result, the banking system suffered from the crisis relatively, due to less dependence on foreign investment.
The liquidity analysis of a number of banks, the consequences of the global economic crisis, and many other factors make the problem of improving liquidity management of particular importance.
Considering its theoretical foundations used today in banking, it should initially be noted that the unit of economic activity of any enterprise is a transaction or, in relation to a bank, an operation. Based on this, the bank's liquidity can be defined as an indicator reflecting the change in the state of the bank in the course of banking operations. Consequently, the management of the liquidity of the bank is nothing more than the organization of banking operations in such a way as to ensure the availability of the necessary amount of means of payment at the right time.