Why is maturity mismatch important for understanding a bank’s risk and analyzing its performance?
Answer to relevant QuestionsWhat are the benefits of a long-term perspective on value creation? For companies? For the economy? Explain the conservation of value principle. What decisions might it affect? Apply the conservation of value principle to acquisitions. Identify and discuss real examples of companies with a competitive advantage based on customer lock-in as opposed to product innovation. Which do you expect to sustain a high ROIC for a longer time? If a bank increases its maturity mismatch, what happens to its economic spread before taxes and its economic spread after taxes (i.e., including the tax penalty)?
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