Maturity mismatch

Maturity mismatch

In the context of hedging, maturity mismatch arises when a hedging instrument does not match the maturity of the underlying assets thus creating an imperfect hedge. In the context of balance sheets, maturity mismatch arises when there are more short-term liabilities than short-term assets to cover the liabilities with.
References in periodicals archive ?
We need long term liability to reduce the maturity mismatch.
But, in the absence of deep long-term fund pool, private project developers bear higher cost of credit owing to revenue-cost maturity mismatch.
The covered bond issue reduces the maturity mismatch on PKO BHs balance sheet and enhances and diversifies PKO Bank Polski Groups financing structure by providing access to long-term funding for its mortgage loan portfolio.
First, the maturity mismatch between the mortgages and the issued notes resides in the trust (as does the risk inherent in a cross-currency swap).
Bakker and Schrijvers (2000) reported a maturity mismatch of approximately 8.
Secondly, commercial banks often get short-term financing from abroad and sell it as long-term credit, which causes a maturity mismatch and banks become vulnerable to unexpected volatilities.
The remaining three categories seek to assess the vulnerability of a nonbank financial company to financial distress: leverage, liquidity risk and maturity mismatch, and existing regulatory scrutiny.
Coupon will be paid on a monthly basis at a fixed rate, while proceeds will go for cutting maturity mismatch between the company's assets and liabilities.
Those methods include monitoring measures of leverage and maturity mismatch at financial intermediaries, examining asset valuations, underwriting standards for loans, and eyeing credit growth for signs of a credit-induced buildup of systemic risk.
The criteria the FSOC would use to identify a troubled, systemically important "nonbank financial company" could include: 1) size, 2) lack of substitutes for the financial services and products the company provides; 3) interconnectedness with other financial firms; 4) leverage; 5) liquidity risk; 6) maturity mismatch and 7) existing regulatory scrutiny.
Moves to address liquidity management and what has been almost a structurally inbuilt maturity mismatch in Islamic finance are therefore to be most welcomed.
Credit challenges include a significant balance sheet maturity mismatch and a high degree of asset concentration.