If a bank has a negative gap,then a decrease in interest rates will increase income.

Name: If a bank has a negative gap,then a decrease in interest rates will increase income.
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A negative gap means that the bank has more liabilities (deposits) than assets (loans), which exposes them to interest rate risk. When interest rates decrease, the cost of liabilities decreases faster than the revenue from assets, resulting in an increase in net interest income for the bank.

If a Bank Has a Negative Gap,then a Decrease in Interest