CIMA BA1 · Chapter 12 · Question 2 of 9
Banks and building societies accept short-term deposits and make long-term loans. This process is known as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Maturity transformation
Explanation
Maturity transformation allows savers to lend for short periods while borrowers obtain long-term finance. Risk transformation refers to spreading risk across many borrowers, and aggregation means pooling small deposits into larger loans.
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