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The Impact of Systemic Liquidity Risk on Stability of the Polish Economy (Wplyw systemowego ryzyka plynnosci na stabilnosc gospodarki polskiej)

Author

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  • Jerzy Piotr Gwizdala

    (Katedra Finansów i Ryzyka Finansowego Wydzialu Zarzadzania Uniwersytetu Gdanskiego)

Abstract

An increase in the risk is essential for the economy and its stability. Higher liquidity risk in the system causes lower capacity to absorb shocks and higher probability of adverse trends propagation. The banking system, having less liquidity reserves, is more vulnerable to the phenomenon of “pro-cyclicality”, i.e. the strengthening of economic cycles. Short- and long-term microeconomic risks in banks may, in a situation of liquidity tension, lead to significant inhibition of economic growth. An increase in liquidity risk impairs the mechanisms of monetary policy, whereas a growth of potential burden on the Bank Guarantee Fund generates the risk of a banking crisis becoming a sovereign crisis. The existence of currency liabilities and long-term currency liquidity risk expose the Polish economy to a stronger transmission of the crisis from abroad.

Suggested Citation

  • Jerzy Piotr Gwizdala, 2015. "The Impact of Systemic Liquidity Risk on Stability of the Polish Economy (Wplyw systemowego ryzyka plynnosci na stabilnosc gospodarki polskiej)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 13(55), pages 19-29.
    • Handle: RePEc:sgm:pzwzuw:v:13:i:55:y:2015:p:19-29
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    References listed on IDEAS

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    More about this item

    Keywords

    risk; system; liquidity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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