The Strategy of Interest Rate Risk Management in the Jordanian Commercial Banks by Using Interest Rate Swaps. An Empirical Study
Journal: Albalqa Journal for Research and Studies (Vol.12, No. 2)Publication Date: 2008-06-01
Authors : Prof.Dr.Muayid Abed Al-Rahman Al-Dowre; Said Akel;
Page : 75-120
Keywords : Jordanian Commercial Banks- Interest Rate Swaps.;
Abstract
The study examines how interest rate risks are managed at the Jordanian commercial banks, and explores how far the strategy pertinent to interest rate swaps is implemented in terms of managing interest rate risks at the Jordanian commercial banks. The sample studied consists of l 3 Jordanian commercial banks during the period 2000-2005. The empirical method has been used for investigating the real financial data taken from balance sheets issued by these banks. Data were analyzed, hypotheses were tested using the simple and multiple linear regressions, and paired sample T- test. The Study came to the following major conclusions: implementing the modern strategy based on using interest rate swaps proved that such strategy is active, efficient and superior' to the conventional strategy used in Jordanian commercial banks. This led to reducing risks and increasing profits. The modern strategy based on using interest rate swaps has never been implemented at the Jordanian commercial banks. This study has been concluded with implementing a strategy based on using interest rate swaps for managing interest rate risks at the Jordanian commercial banks. The method of using these instruments has already been explained in detail.
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