Banks, Maturity Mismatches and Liquidity Crises: A Simple Model
CIES Working Paper No. 132
14 Pages Posted: 21 Dec 2001
Date Written: July 2001
In determining the maturity structure of bank loans in the presence of pre-determined, short-term international liabilities, we show that maturity mismatches in banks' balance sheets are fully consistent with the assumption of banks acting as self-interested, optimising agents. Although often attributed to the moral hazard associated with safety nets, the analysis shows that financial crises can occur in their absence.
Keywords: banks, currency crisis, East Asia, maturity mismatches, moral hazard
JEL Classification: F34, F39, G21
Suggested Citation: Suggested Citation
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By Hong G. Min