Literature Review on the Stability of Funding Models

14 Pages Posted: 5 Mar 2014

Date Written: February 1, 2014

Abstract

Financial intermediaries have an important role as liquidity providers — they perform maturity and liquidity transformation by issuing liquid, short-term liabilities while holding illiquid, long-term assets. But there is an inherent fragility associated with this role. This article provides a review of the economics literature on the stability of banks and other financial intermediaries, with a policy-oriented focus on their funding models. Yorulmazer employs the standard framework used in the literature to examine the fragility of intermediaries that conduct maturity and liquidity transformation. He then considers potential factors that make them more or less stable. Developments in the financial sector that may have affected the stability of funding models are also discussed.

Keywords: liquidity transformation, maturity transformation, bank run

JEL Classification: G21, G01

Suggested Citation

Yorulmazer, Tanju, Literature Review on the Stability of Funding Models (February 1, 2014). Economic Policy Review, Vol. 20, No. 1, 2014, Available at SSRN: https://ssrn.com/abstract=2403900

Tanju Yorulmazer (Contact Author)

Koc University ( email )

Rumeli Feneri Yolu
Sariyer, Istanbul, 34450
Turkey

HOME PAGE: http://gsssh.ku.edu.tr/en/departments/economics/akademik-kadro/show/tyorulmazer/

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