Final answer:
A transaction increasing a current liability is typically the obtaining of a loan. In the financial market, an increase in the quantity of loans made and received is driven by a rise in demand and supply for loans, but can be complicated by banks' asset-liability mismatches.
Step-by-step explanation:
A transaction that is likely to cause an increase in a current liability is the obtaining of a loan. When a business obtains a loan, it receives cash or another asset, which increases its current liabilities because the borrowed sum must generally be repaid within the next year.
Looking specifically at changes in the financial market, an increase in the quantity of loans made and received can indeed be associated with certain conditions. When there is a rise in demand for loans, more individuals and businesses are looking to borrow money, which can lead to an increase in the quantity of loans. If this increased demand is met with a rise in supply of loans from the financial institutions, it will lead to an even greater volume of loans transacted.
However, if banks encounter higher interest rates after issuing loans, they may be pressed into a dilemma. They could lose deposits to competitors offering higher interest rates, or if they do match the rates, they might end up paying more in interest to depositors than they are receiving from existing loans. Both scenarios are detrimental to the bank's financial health, and this risk arising from asset-liability time mismatch is a looming concern for financial institutions.