A theory that focuses in banks issuing liabilities to meet liquidity needs. Liquidity and liability management are closely related. One aspect of liquidity risk control is the buildup of a prudential level of liquid assets. Another aspect is the management of the Deposit institution’s (DI) liability structure to reduce the need for large amounts of liquid assets to meet liability withdrawals. However, excessive use of purchased funds in the liability structure can result in a liquidity crisis if investors lose confidence in the DI and refuse to roll over such funds.