Volume : III, Issue : VI, June - 2013

Impact of Interest Rate Risk In Banking System

C. Prabhavathi

Abstract :

‘Managing risk’ is significant to individuals and institutions. Risk refers to how much the price of a security changes for a given change in some factor. The fundamental aspect in this concept of managing risk is the risk return trade off. There states a saying “what gets measured gets managed”. In contrast, what cannot be measured cannot be managed. Hence a measure for risk to estimate the returns in evaluation of its impact on target measures is essential in risk management. This paper reviews earlier studies to understand the interest rate risk, different types of interest rate risk, management of interest rate risk and areas exposed to this risk in banks. The paper first gives the theoretical background to the concept of interest rate risk and the different types of interest rate risk. The paper then discusses the measurement and management of interest rate risk by banks. The study concludes with the areas exposed to interest rate risk, to be considered by the bank management in making decisions about the appropriate amount of interest rate risk.

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Article: Download PDF   DOI : 10.36106/ijar  

Cite This Article:

C.Prabhavathi Impact of Interest Rate Risk In Banking System Indian Journal of Applied Research, Vol.III, Issue.VI June 2013

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