Economics, Econometrics and Finance
2 years ago

Banks at Risk: Interest Rate Management Crucial for Financial Stability.

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NET INTEREST INCOME (NII), NET INTEREST MARGIN (NIM) AND THE MANAGEMENT OF INTEREST‐RATE RISK IN THE BANKING BOOK
Moorad Choudhry

Paper Summary

The article discusses how banks manage the risk of changes in interest rates to protect their profits and capital. They use tools like gap reports and simulation models to assess this risk. Banks aim to minimize gaps in their interest-rate positions to stay financially stable.

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