Tag: Margin

How Banks Are Paid For Interest Rate Risk

PROTECTING BANK MARGINS
PROTECTING BANK MARGINS

We have written numerous blogs about why banks should reconsider the risk-for-yield business model when it comes to credit or interest rate risk. The return on equity (ROE) in risk-for-yield businesses is low, and the business outcomes during downturns are adverse.  Instead, banks should construct an advisory business where taking risk may be just one element in delivering a customer-centric solution.

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