Research QuestionsIntroductory InformationThe role of the financial system in society is to efficiently allocate credit (Hartlage, 2012). However, the nature of banking is to receive deposits with short-term maturities, but lend long-term (Hartlage, 2012). Consequently, this process of maturity transformation exposes banks to liquidity risks (Hartlage, 2012). The 2008 global financial crisis (GFC) started as a credit crisis, which turned into a liquidity crisis as banks were afraid to lend to other banks because they did not know who held illiquid assets (Imbierowicz & Rauch, 2014 ). Liquidity and credit risks play a central role in banking stability; not taking their joint presence into account in their risk management systems was one of the main causes of bank failure during the global financial crisis (Imbierowicz & Rauch, 2014). After the global financial crisis, the Basel Committee on Banking Supervision (BCBS) reached the Basel III Accord, a measure designed to strengthen the liquidity positions of financial institutions, so that they can withstand financial and economic shocks (Ramona, 2013). III liquidity recommendations is the Liquidity Coverage Ratio (LCR), the implementation of which will be a challenging task for any bank (Ramona, 2013). Banks will also need to streamline their systems and processes to operate effectively and reduce capital requirements (Ramona, 2013). According to Hartlage (2012), the objective of the LCR is to require banks to have sufficient liquidity to survive 30 days in severe financial distress. There are key implications for future work to understand the impact of Basel III LCR requirements (Balasubramanyan and VanHoose, 2013). First, the dynamic behavior of cash flows used to calculate the denominator of the LCR (Balasubra...... middle of the paper...... The relationship between liquidity risk and credit risk in banks. Journal of Banking & Finance, 40242- 256. doi:10.1016/j.jbankfin.2013.11.030 Jasienėl, M., Martinavičius, J., Jasevičienė, F., & Krivkienė, G. (2012). (2), 186-204 doi:10.3846/bme.2012.14Kern, R. (2012). Handout on research questions. Retrieved from http://apps.fischlerschool.nova.edu/toolbox/Dissertation/Handouts/Laerd Dissertation. (2012).In Dissertations & Theses, an online textbook Retrieved from http://dissertation.laerd.com/Ramona, T. (2013).BASEL I, II, III: Challenges to Bank Capital Adequacy Annals of the University of Oradea, Economic Sciences Series, 22(2), 463-471 Retrieved from http://steconomice.uoradea.ro/anale/en_index.html