Question

In macroeconomics, _____________________________ describes a situation where a bank's liabilities can be withdrawn in the short-term while its assets are being repaid in the long-term.

Answer 1

Answer:

Asset-liability mismatch

Explanation:

When a bank makes a conscious effort to ensure that the timing of its risk assets (loan assets) is not longer than that of its deposit liabilities, that is what is called asset-liability matching. A situation where due to bad monitoring, the timing of its risk assets(loan assets) is longer than the timing of its deposit liabilities, we have what we called asset-liability mismatch