what is the difference between financial intermediation and maturity transformation

Expert Solution

Financial intermediation will mean that acting as a intermediary between the savers and the borrowers by different banks or by different other entities and channelizing the funds to enhance the money flow into the economy. It is a productive method under which institutional unit will be occurring liabilities on its own account for acquiring financial assets.

Maturity transformation is a practice of borrowing money on the shorter time frame, by the Financial institutions rather than lending money out.it is a transformation of maturity of different type of securities in order to enhance the books of accounts by the financial intermediaries.

So, this both concepts of financial intermediation and maturity transformation are different because financial intermediation is a wider process encompassing a large amount of objectives and goals whereas, maturity transformation is narrower process which will be focused at transformation of maturity of different securities.

jeff jeffy answered 1 year ago

What is the difference between Financial Intermediation and Maturity Transformation?

Default (Credit) Risk Intermediation Liquidity Intermediation Time (Maturity) Intermediation Information Intermediation Denomination Intermediation Production Intermediation Which...

Default (Credit) Risk Intermediation Liquidity Intermediation Time (Maturity) Intermediation Information Intermediation Denomination Intermediation Production Intermediation Which of the six services do you think an investor would be willing to pay the most to a financial intermediary to receive? Which do you think an investor would be willing to pay the least? Explain your selections.

what are the theories of financial intermediation?

Banks are financial intermediaries engaged in maturity transformation. Explain what it means for banks to engage...

Banks are financial intermediaries engaged in maturity transformation. Explain what it means for banks to engage in maturity transformation and what are the risks associated with it for banks and depositors. How do banks make profits?

How can you determine the standard matrix of a linear transformation? What is the difference between...

How can you determine the standard matrix of a linear transformation? What is the difference between a one-to-one linear transformation and an onto linear transformation?

What is the difference between the yield on a discount basis and the yield to maturity...

What is the difference between the yield on a discount basis and the yield to maturity for a T-bill? How might a firm use the commercial paper market to deal with seasonal fluctuations in sales?

On the financial system of the country using the intermediation approach what are the following ratios...

On the financial system of the country using the intermediation approach what are the following ratios measures. 1) Private credit by deposit money banks to GDP (%). 2) Private credit by deposit money banks and other financial institutions to GDP (%). 3) Deposit money banks’ assets to GDP (%). 4) Deposit money bank assets to deposit money bank assets and central bank assets (%). 5) Liquid liabilities to GDP (%). 6) Financial system deposits to GDP (%). 7) Life insurance...

a. What is the interrelationship among i. financial inclusion, ii. financial deepening iii. financial intermediation? b...

a. What is the interrelationship among i. financial inclusion, ii. financial deepening iii. financial intermediation? b .Why are these concepts so important?

a) What is the interrelationship among financial i) inclusion ii )financial deepening iii) financial intermediation? b)...

a) What is the interrelationship among financial i) inclusion ii )financial deepening iii) financial intermediation? b) Why are these concepts so important?

Describe how financial intermediation and financial innovation affect banking.

Question