imported>Doug Williamson |
imported>Doug Williamson |
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| Borrowers and depositors generally have differing preferences about the maturity of their obligations and investments.
| | In relation to goal-setting, Specific, Measurable, Achievable, Realistic and Time-specific. |
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| Borrowers normally prefer to borrow longer-term, for example to fund long-term investment in productive assets.
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| Investors generally prefer shorter-term, more liquid assets.
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| 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.
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| 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.
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| == See also ==
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| * [[Bank]]
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| * [[Interest rate transformation]]
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| * [[Leverage]]
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| * [[Liquidity preference]]
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| * [[Maturity]]
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| * [[Maturity mismatch]]
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| * [[Prudential Regulation Authority]]
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| * [[Riding the yield curve]]
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| * [[Run]]
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| * [[Shadow banking]]
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| [[Category:Accounting,_tax_and_regulation]]
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| [[Category:The_business_context]]
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| [[Category:Long_term_funding]]
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| [[Category:Identify_and_assess_risks]]
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| [[Category:Manage_risks]]
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| [[Category:Risk_frameworks]]
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| [[Category:Risk_reporting]]
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| [[Category:Cash_management]]
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| [[Category:Financial_products_and_markets]]
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| [[Category:Liquidity_management]]
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In relation to goal-setting, Specific, Measurable, Achievable, Realistic and Time-specific.
