Asset Liability Management
Asset Liability Management — Managing rate, liquidity, and maturity mismatches.
Definition
Asset Liability Management refers to managing rate, liquidity, and maturity mismatches. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Bank funding and deposit behavior transmit stress into credit supply and asset prices. When managing rate, liquidity, and maturity mismatches shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what asset liability management is saying. If managing rate, liquidity, and maturity mismatches moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Pair with deposit betas, wholesale funding, and regulatory ratios before calling a scare over. Prefer a short written null hypothesis for Asset Liability Management: what would falsify the current reading in the next window?