profitability of banks' portfolios affect their ability to cover for any liquidity shortage and hence influence the premium they … require to carry maturity risk. During a boom, profitability is increasing and thus spreads are low, while during a recession … profitability is decreasing and spreads are high, in accordance with the cyclical properties of term spreads in the data. Second, we …

the risk of maturity transformation. First, we show that fluctuations of the future profitability of banks' portfolios … risk. When economic activity is reaching its peak, expected profitability is relatively high and spreads are low; during a … recession expected profitability is relatively low and spreads are high, in line with the time series properties of term spreads …

We investigate the monetary linkage between aggregate accounting profitability changes and inflation. Recent previous … (i.e., real riskless rate, expected inflation, and expected equity risk premium) further supporting the theory of … the impact of aggregate profitability changes on monetary-policy-stance measures in order to explain the relation between …