Abstract
Funds transfer pricing (FTP) is widely acknowledged as an important part of banks’ asset and liability management (ALM). This paper makes two contributions to the existing FTP-theory. First, we analyze the implications of adding a liquidity premium to the FTP. Second, since a majority of the existing banking markets are dominated by a limited number of large banks we also cover the case of kinked demand and supply curves on oligopolistic and oligopsonistic competition, respectively.
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