Interest Rate Risk at MCCU / Robert Tokle.

Format:

Book

Author/Creator:

Tokle, Robert, author.

Series:

SAGE Business cases.

SAGE Business cases

Language:

English

Subjects (All):

Financial institutions--Management.

Financial institutions.

Physical Description:

1 online resource

Place of Publication:

London : Society for Case Research, 2025.

Summary:

Sue Smith was a board member of Midwestern Community Credit Union (MCCU) in 2013, when short-term interest rates were still near zero as a result of an easy Federal Reserve monetary policy following the 2007-2009 recession. Sue had a background in finance and remembered the S&L crisis of the early 1980s, when many S&Ls failed due to an interest rate mismatch of holding long-term fixed-rate mortgages as their main asset, while funding them by short-term savings deposits. As interest rates increased, S&Ls for a time period were on average paying more for their deposits than they were earning from their mortgage loans. A large number of S&Ls went out of business. MCCU started using a consultant, CU Services, who used rather complicated asset-liability management (ALM) model to monitor interest rate risk. Sue was surprised that the new model actually predicted that MCCU would benefit quite a bit in an increasing interest rate environment. As a board member with fiduciary responsibility to the MCCU members, Sue decided that she needed to better understand this model to judge for herself if this analysis made economic sense. While this a descriptive case, as a board member, Sue needed to evaluate whether the ALM analysis made sense, and hence if there would be any concern of interest-rate risk for MCCU when rates would begin to increase. This case addresses interest-rate risk and how a small credit union tried to assess their interest-rate risk for both their own management and also for their examiners by first using a simple in-house gap model, and later by hiring CU Services. This case is appropriate for junior/senior level courses in money and banking, financial institutions, and other areas in finance.

Notes:

Description based on publisher supplied metadata and other sources.

ISBN:

9781071979945

1071979949

OCLC:

1483993565