Bank Balance Sheets & Interest Rate Risk

This lecture covers bank balance sheets, financial intermediation risks, and interest rate risk. It delves into the structure of bank balance sheets, key performance metrics, and the overview of risks faced by financial institutions. The instructor discusses the impact of interest rate changes on banks' net interest income and net worth, emphasizing the importance of managing duration gaps. Various risk types, including credit risk, liquidity risk, and market risk, are explored in detail. The lecture also touches on measuring bank performance through indicators like return on assets and return on equity, shedding light on the complexities of interest rate risk management in the banking sector.