We use the term structure of bank CD rates to examine whether maturity-transformation risk is priced into the rates … banks offer customers. We find that depositors pay a significant cost for the liquidity provided by bank deposits. This cost … is strongly related to the amount of maturity-transformation risk that these deposit accounts create. The cost is also …

income gap. Secondly, we show that income gap also predicts the sensitivity of bank lending to interest rates. Quantitatively …, a 100 basis point increase in the Fed funds rate leads a bank at the 75th percentile of the income gap distribution to … increase lending by about 1.6 percentage points annually relative to a bank at the 25th percentile …

than those on debt of longer maturity. In a standard asset pricing model, we show that increasing short-run default risk in … perceived default risk, bond prices, and haircuts by maturity …

. Standard models impose precise internal consistency conditions on the joint behavior of long and short maturity claims and … these are strongly rejected in the data. In particular, long maturity prices are significantly more variable than justified …

-varying debt maturity choices, as well as its implications for the term structure of credit spreads. Compared to short-term debt … liquidity costs changing over the business cycle, our calibrated model implies that debt maturity is pro-cyclical, firms with … high systematic risk favor longer debt maturity, and that these firms will have more stable maturity structures over the …

relationship with money and its supply by the central bank. Payment of interest on reserves (IOR) could potentially reduce … money did not result in a broader fall in the opportunity costs of money for non-bank market participants …

shocks. Since bank deposits provide liquidity, higher interest rates allow banks to earn larger spreads on deposits … rise. This risk exposure can be achieved by a traditional maturity-mismatched balance sheet, and amplifies the effects of …' maturity mismatch …

of deposit insurance as a function of capital-asset ratio for a bank with demand liabilities and longer term, default …

We show that maturity transformation does not expose banks to significant interest rate risk--it actually hedges banks … maturity transformation. Consistent with this view, we show that banks' aggregate net interest margins have been highly stable …