Maturity transformation and Pip: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
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Borrowers and depositors generally have differing preferences about the maturity of their obligations and investments.
#The most junior digit in a foreign currency quotation.
 
#More generally, a minimum price movement for any quoted instrument or asset.
Borrowers normally prefer to borrow longer-term, for example to fund long-term investment in productive assets.
 
Investors generally prefer shorter-term, more liquid assets.
 
 
Maturity transformation is the essential economic function of banks and other intermediaries, which enables both borrowers and investors to meet their differing needs for maturities.
 
For this to work, there needs to be a very high degree of market confidence in the bank, especially on the part of its depositors.




== See also ==
== See also ==
* [[Bank]]
* [[Basis point]]
* [[Interest rate transformation]]
* [[Leverage]]
* [[Liquidity preference]]
* [[Maturity]]
* [[Maturity mismatch]]
* [[Prudential Regulation Authority]]
* [[Riding the yield curve]]
* [[Run]]
* [[Shadow banking]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Manage_risks]]
[[Category:Risk_reporting]]
[[Category:Manage_risks]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 15:01, 30 June 2014

  1. The most junior digit in a foreign currency quotation.
  2. More generally, a minimum price movement for any quoted instrument or asset.


See also