A (an)________ is a financial intermediation device designed to allow banks to create off-balance sheet investment entities that "borrow short" and "lend long".

Question

Quizplus · Accepted Answer

A structured investment vehicle (SIV) is a financial intermediation device that allows banks to create off-balance sheet investment entities that borrow short-term funds through the issuance of commercial paper and invest the proceeds in longer-term, higher-yielding assets. This enables banks to increase their profitability by earning a higher return on their investments while keeping the associated liabilities off their balance sheets. However, SIVs were a major contributor to the 2008 financial crisis when they experienced liquidity problems and were unable to roll over their commercial paper, leading to defaults and write-downs.

A (An)________ Is a Financial Intermediation Device Designed to Allow