I'm not sure there is room for the detailed minutiae of economic debate on here, which is why I chose that article over others. It gave a good overview expressed in straightforward terms, which I felt would be accessible to everyone, whilst illustrating the points well."Ancient Colin" wrote:Caught by the word limit. Further: the Upton article is pretty superficial on the mechanisms and makes some strong assertions that are open to question. It's really not very clear on the capital adequacy / asset base / Basel II / balance sheet uses and makes a lot of a "maturity mismatch" which is always present - a completely conventional tradition lender basing their lending on deposits still has a maturity mismatch because the depositors can withdraw at any time and at short notice, but loans are long term commitments. Lenders are, hence, always vulnerable to bank runs caused by external events and information asymmetry.
I don't think maturity mis-matches are at all relevant to the argument if I understand what you mean by that phrase, because there is no known reason for depositers to withdraw, which is precisely why Nationwide and others haven't suffered.