Interest rate transformation

Interest rate transformation is the essential economic function of banks and other intermediaries, which enables both borrowers and investors to meet their differing preferences in relation to interest rates.

For example, a bank take deposits on a floating interest rate basis, and lend funds to a borrower on a fixed rate basis.

See also

• Bank
• Basis
• Collateral transformation
• Fixed rate
• Floating rate
• Maturity transformation
• Transformation