A margin analysis of NIM examines reasons for changes in interest revenues to assets (IR%) and changes in interest expenses to assets (IE%). The changes are a function of which of the following:

Question

Quizplus · Accepted Answer

A margin analysis of NIM takes into consideration all three factors: volume changes, rate changes, and balance sheet composition changes. Volume changes occur with growth in assets and the % of earning assets to total assets, rate changes occur with a rise or fall in rates on individual balance sheet items, and balance sheet composition changes occur when there is a shift in the mix of assets and liabilities. Therefore, the correct answer is D, all of the above.

A Margin Analysis of NIM Examines Reasons for Changes in Interest