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New methods for savings and loans to hedge interest rate risk

Author

Listed:
  • Thomas J. Merfeld
  • Charles S. Morris

Abstract

Increased interest rate volatility in recent years has led to a greater volatility in profits at savings and loan associations. To help stabilize their profits, some S&L's are implementing interest rate hedging programs. These programs use financial instruments such as interest rate swaps, financial futures and options on financial futures. Because hedging programs introduce their own risks, S&L's should thoroughly examine all aspects of the programs before employing them.

Suggested Citation

  • Thomas J. Merfeld & Charles S. Morris, 1988. "New methods for savings and loans to hedge interest rate risk," Economic Review, Federal Reserve Bank of Kansas City, vol. 73(Mar), pages 3-15.
    • Handle: RePEc:fip:fedker:y:1988:i:mar:p:3-15:n:v.73no.3
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    File URL: https://www.kansascityfed.org/documents/1493/1988-New%20Methods%20for%20Savings%20and%20Loans%20To%20Hedge%20Interest%20Rate%20Risk.pdf
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