Bank liquidity has become an important focus of financial regulatory reforms since the dangers of liquidity crunches became all too apparent in the recent Global Financial Crisis (GFC). In response to ongoing regulatory pressure and the introduction of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, large US banks like JP Morgan Chase increased the amount of liquid securities and cash they held in an effort to al- lay concerns about liquidity risks. However, it is uncertain whether the new emphasis on funding liquidity requirements suggested in the new Basel III guidelines globally and in the Dodd-Frank Act within the U.S. will make banks less risky and the whole financial system more stable going forward. Therefore, better understanding the potential relation between banks’ funding liquidity risk and their risk-taking behaviour is of paramount importance when cur- rent regulatory reforms in global banking regulation have focused on getting banks to become more liquid than they have been in the past.