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If the banks run out of liquidity and are forced to a premature liquidation of their assets because of their market value goes below their book value and they are led to insolvency. (Kashyap and Stein, 2000; Bougheas, 1999) Besides that, Benmelech and Bergman (2011) also showed that the spreads of tranches which is Bankrupt Buyers and Bankrupt Aircraft without a liquidity enhancement are more sensitive to bankruptcy shocks. Macroeconomic variables also is another factor that can influence liquidity in firm. According to Zavgren (1983) as cited in Hill, Perry, and Andes (2011), “Raising interest rates, a recessionary environment, and the availability of credit” may affect a firm’s change in financial status. The higher interest rate may affect a firm’s ability to borrow fund for the future because of illiquidity capital in firm.
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