Asset Liability Mismatch

Asset Liability Mismatch

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Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. In finance, an asset-liability mismatch occurs when the financial terms of an institution's assets and liabilities do not correspond. Several types of mismatches are possible. For example, a bank that chose to borrow entirely in U.S. dollars and lend in Russian rubles would have a significant currency mismatch: if the value of the ruble were to fall dramatically, the bank would lose money. In extreme cases, such movements in the value of the assets and liabilities could lead to bankruptcy, liquidity problems and wealth transfer. As another example, a bank could have substantial long-term assets (such as fixed rate mortgages) but short-term liabilities, such as deposits. This is sometimes called a maturity mismatch, which can be measured by the duration gap. Alternatively, a bank could have all of its liabilities as floating interest rate bonds, but assets in fixed rate instruments. Mismatches are handled by asset liability management.
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Product details

  • Paperback | 60 pages
  • 152 x 229 x 4mm | 100g
  • Dict
  • United States
  • English
  • black & white illustrations
  • 6136682591
  • 9786136682594