Interest gap: Difference between revisions

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imported>Doug Williamson
(Expand.)
 
imported>Doug Williamson
(Amend typo 'liabilities' to 'assets'.)
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This structural interest gap is usually negative.
This structural interest gap is usually negative.


The negative interest gap results from shorter-term liabilities funding longer term liabilities.
The negative interest gap results from shorter-term liabilities funding longer term assets.





Revision as of 20:59, 23 July 2016

A mismatch in the timing at which interest-rate assets and liabilities are repriced.

A positive gap (assets repricing more quickly than liabilities) means an exposure to falling interest rates and vice versa.


Banks and other financial institutions commonly have a 'structural' interest gap, resulting from the nature of their business and the structure of their balance sheets.


This structural interest gap is usually negative.

The negative interest gap results from shorter-term liabilities funding longer term assets.


See also