Funds transfer pricing (FTP) is widely acknowledged as an important part of banks' asset and liability management (ALM). This paper makes two contributions to the existing FTP-theory. First, we analyze the implications of adding a liquidity premium to the FTP. Second, since a majority of the...

We analyze the economic issue raised when financial intermediaries refuse to supply credit to a borrower even at a higher rate than that posted by lenders. We suggest that patent-backed loans can be used as a contracting device to reduce credit rationing in loan markets characterized by...