Interest gap: Difference between revisions
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imported>Doug Williamson (Amend typo 'liabilities' to 'assets'.) |
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* [[Assets]] | * [[Assets]] | ||
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Revision as of 13:05, 27 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.
