Funding gap (funding shortfall)

Unless otherwise defined, the ratio of a bank’s loans to nonbanks to deposits from nonbanks. An institution must close this gap by refinancing on the interbank money market (wholesale market). – In times of crisis, this can create a problem if the refinancing markets suddenly dry up due to high uncertainty about the creditworthiness of counterparties, as was occasionally the case in the financial crisis that followed the subprime crisis. – Cf. Financial Stability Report 2009, p. 42 (funding gap in Germany since 2004; overview).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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