Document Type : Research Article
Author
Abstract
Interest rate risk is major risk arise from dynamic market conditions and strongly affect
the net interest income economy value of the financial institutions. This impact will be
higher when mismatch between assets and liabilities is wider (maturity and interest rate
wise). Therefore, present study analyzed the interest sensitivity of assets and liabilities in
largest deposit taking NBFCs in Tamilnadu i.e. Sri Ram Transport Finance limited. The
study applied GAP Analysis technique which is popular tool to measure of interest
sensitivity in different time period. The study period is six years 2015-2020. The study
found that significant and wider gap between assets and liabilities in very short period (1
day to 3 months) and insignificant gap in short period (3m to one year) and long period
(one year to five years). Therefore, the study found that, effect of interest rate fluctuations
on NII and economic value is higher in short period and insignificant short and long
period.
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