Liquidity risk is the academic concept and area of financial risk management research concerning the potential difficulty or inability of an entity to meet its short-term financial obligations due to insufficient liquid assets or the inability to convert assets into cash without significant price impact. This concept investigates the causes, manifestations, and consequences of such illiquidity across financial markets and institutions, encompassing both market liquidity risk (difficulty selling assets at market value) and funding liquidity risk (difficulty obtaining necessary financing). Its significance lies in its critical impact on operational resilience, financial stability, and the necessity for robust risk management strategies and regulatory frameworks.