Banking · Interest Rate Risk
Interest rate risk is a significant concern for banks because mismatches between the repricing of assets and liabilities can affect both earnings and economic value. In this context, interest rate risk mainly arises when:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Loan documentation does not contain arbitration clauses
- 2Foreign exchange reserves decline due to external trade deficit
- 3Changes in interest rates adversely affect income or the value of assets and liabilities✓
- 4The institution fails to comply with CRR and SLR requirements
Correct answer
Changes in interest rates adversely affect income or the value of assets and liabilities
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