Financial institutions such as U.S. savings institutions and commercial banks traditionally had fewer interest rate-sensitive ____ than ____ and therefore were adversely affected by ____ interestrates.

Question

Quizplus · Accepted Answer

Savings institutions and commercial banks typically have more long-term fixed-rate loans as assets compared to their interest-sensitive deposits and borrowings as liabilities. As a result, when interest rates increase, their interest expenses increase more than their interest income, resulting in a decrease in profitability. Thus, option A is the best choice as it describes this situation.

Financial Institutions Such as U