A bank with a positive interest-sensitive gap will have a decrease in net interest income when interest rates in the market:

Question

Quizplus · Accepted Answer

A positive interest-sensitive gap means that the bank's assets are more sensitive to interest rate changes than its liabilities. When interest rates fall, the income from these assets decreases more than the cost of liabilities, leading to a decrease in net interest income.

A Bank with a Positive Interest-Sensitive Gap Will Have a Decrease