Several factors can contribute to liquidity risk, including:
Mismatched Maturities: When the maturities of assets and liabilities are not aligned, it can create liquidity gaps. Market Volatility: Fluctuations in market conditions can impact the ability to sell assets quickly without significant losses. Operational Issues: Inefficient operations or unexpected disruptions can strain a company's liquidity. Credit Constraints: Limited access to credit or tightening of lending conditions can exacerbate liquidity challenges.