Financial Transformation

Appleton Greene
A process whereby a financial institution capitalizes on mismatches between the two sides of its balance sheet (assets and liabilities). Financial intermediaries conduct several types of financial transformation: size transformation; maturity transformation; credit transformation; liquidity transformation; and risk transformation. Sometimes, the term “financial transformation” is interchangeably used with leverage (e.g., corporate financial transformation or corporate leverage and personal financial transformation or homemade leverage).