Interest gap

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

• Assets
• Behavioural gap
• Contractual gap
• Exposure
• Gap report
• Gap risk
• Interest
• Interest gap report
• Liabilities
• Liquidity gap
• Maturity ladder
• Repricing
• Risk management