Maturity transformation can be done by:
A)depository banks but not by shadow banks.
B)shadow banks but not by depository banks.
C)both depository banks and shadow banks.
D)neither depository banks nor shadow banks.

Question

Quizplus · Accepted Answer

Maturity transformation is the process of borrowing short-term and lending long-term. Both depository banks (such as traditional commercial banks) and shadow banks (such as investment banks and hedge funds) engage in maturity transformation. Therefore, option C is the correct answer.

Maturity Transformation Can Be Done By