A type of transformation whereby a bank or any similar institutions takes advantage of the upward slope of the yield curve by investing in assets that have a longer duration than its liabilities (funding requirements). In other words, this involves the funding of long-term assets with short-term liabilities (where a bank makes long-term loans using funds that are borrowed at short-term interest rates).
In simple terms, maturity intermediation is a bank’s attempt to generate returns through maturity mismatches between assets and liabilities.
