Asset-side liquidity risk may be a result of OBS lending commitments.

Question

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OBS (off-balance sheet) lending commitments refer to loan agreements that may not appear on a bank's balance sheet but still represent obligations. Asset-side liquidity risk arises from the possibility that a bank may not be able to meet the demands of its borrowers with its existing assets, including those from OBS lending commitments. Therefore, asset-side liquidity risk can be a result of OBS lending commitments.

Asset-Side Liquidity Risk May Be a Result of OBS Lending