Asset Liability Management & Interest Rate Risk in the Banking Book - Part 1 of 4
The Education of a Value Investor
Navigating ALM and Interest Rate Risk
This chapter explores the intricacies of Asset Liability Management (ALM) and Interest Rate Risk in the Banking Book (IRRBB), emphasizing their importance in light of recent banking crises. Through case studies, particularly focusing on Silicon Valley Bank and its mishandling of interest rate risks, the discussion highlights the critical need for effective risk measurement strategies. The conversation also addresses liquidity challenges, insolvency risks, and the necessity of proper hedging to ensure financial stability within the banking sector.
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