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Literature review on the stability of funding models

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  • Tanju Yorulmazer

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.

Suggested Citation

  • Tanju Yorulmazer, 2014. "Literature review on the stability of funding models," Economic Policy Review, Federal Reserve Bank of New York, issue Feb, pages 3-16.
    • Handle: RePEc:fip:fednep:00005
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    References listed on IDEAS

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    2. Aaron Mehrotra & James Yetman, 2015. "Financial inclusion - issues for central banks," BIS Quarterly Review, Bank for International Settlements, March.
    3. Patrick McGuire & Goetz von Peter, 2016. "The resilience of banks' international operations," BIS Quarterly Review, Bank for International Settlements, March.

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    More about this item

    Keywords

    maturity transformation; bank run; liquidity transformation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises

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