Final answer:
Liabilities that a company is obligated to pay within one year or less are known as current liabilities. The asset-liability time mismatch in banks is where customers can quickly withdraw a bank's short-term liabilities while asset repayments occur over a longer term, posing liquidity risks.
Step-by-step explanation:
Liabilities that will be due within a short time (usually one year or less) are called current liabilities. This term signifies obligations that a company or financial institution must pay within a relatively brief period, contrasting longer-term liabilities that are due over a longer timeframe.
In the context of banking, asset-liability time mismatch is a related concept, where depositors can withdraw their money, classified as the bank's liabilities, on short notice, while the bank's assets, such as loans, are repaid over a longer term. Such mismatches can lead to liquidity risks, especially if loan defaults rise or if there is a sudden increase in withdrawal demand. Banks manage their balance sheet to ensure that sufficient funds are available to cover short-term liabilities to maintain solvency and continue operations effectively.