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What is Liability Management

Liability Management: The procedure by which financial institutions balance outstanding liabilities, like deposits, CDs, and so on, with suitable liquidity reserves. Banks and other lenders employ liability management to decrease liquidity risks and unfavorable market condition impacts.

Use and management of liabilities, like customer deposits, by a bank in order to ease lending and permit for balanced growth. Management of money allowed from depositors and also funds secured from other institutions comprise liability management. It too includes hedging against changes in interest rates and controlling the gap among the maturities of liabilities and assets.

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