Interest Rate Relationships and Immunization Techniques

Wilbert O. Bascom
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Wilbert O. Bascom: State of Florida

Chapter 8 in The Economics of Financial Reform in Developing Countries, 1994, pp 102-115 from Palgrave Macmillan

Abstract: Abstract An objective of financial reform in developing countries has been to deregulate interest rates and allow the markets to determine their level and structure. But once deregulation has effectively been implemented, real interest rates have been established and formal and informal financial markets integrated, there are some important financial market implications to be considered. Liberalization can result in a sharp rise in the level and volatility in interest rates, particularly in countries with high and unstable inflation rates. Financial strategies that, in a relatively stable interest rate environment, produce a reasonable return on assets net of costs of funds, may not be as effective when rates are higher and more volatile.

Keywords: Interest Rate; Equity Market; Bond Yield; Equity Price; Interest Rate Risk (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-23372-4_8

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DOI: 10.1007/978-1-349-23372-4_8

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