Monitoring and managing interest rate risk

Description

Abstract: For community banks, interest rate risk is a part of doing business, so banks need to monitor that risk and take steps to control it. This article notes that the “right” level of risk depends on several factors, including the size and complexity of a bank’s operations, as well as the sufficiency of its capital and liquidity to withstand the potential adverse impact of interest rate fluctuations. It also points out that managing interest rate risk is particularly important in light of recent rate increases.