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  • The Financial Encyclopedia
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Banking

  Banking   |   Terms
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  • June 2, 2021
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Positive Maturity Transformation

A maturity transformation which results in assets being ‘on average’ longer in maturity than liabilities. This occurs when banks and other financial institutions (intermediaries) accept funds of shorter maturity than their loans (loans made to clients). In this case, intermediaries need to refinance its assets by issuing new liabilities. Banks with positive maturity transformation are said to be borrowing short in order to lend long.

In general, banks engage in positive maturity transformation, while insurers engage in negative maturity transformation.


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