Question

A structural maturity mismatch caused by funding long-term, illiquid infrastructure assets through short-term deposit liabilities directly escalates which category of financial risk?

Q: Answer-A structural maturity mismatch caused by funding long-term, illiquid infrastructure assets through s...

The fundamental hazard of maturity transformation borrowing short and lending long is liquidity risk. It represents the risk that a financial institution will be unable to fulfill its short-term payment obligationssuch as customer withdrawalsbecause its funds are tied up in non-marketable, long-term credit facilities.