Advancing and Strengthening Interest Rate Risk Management Practices and Priority Areas in Commercial Banking
DOI:
https://doi.org/10.51699/cajitmf.v7i4.1353Keywords:
interest rate risk, commercial banks, risk management, interest rate, GAP analysis, duration, asset and liability management, financial stability, derivatives, banking systemAbstract
This article analyzes the theoretical and practical aspects of improving the practice of interest rate risk management in commercial banks. The volatility of interest rates in global financial markets, inflation processes and macroeconomic uncertainties have a significant impact on banking activities. From this point of view, effective management of interest rate risks is an important factor in ensuring the financial stability of banks. The study examined modern methods of interest rate risk management, including GAP analysis, duration analysis and the possibilities of using derivative financial instruments. Also, the current management system in Uzbek commercial banks was analyzed and practical proposals and recommendations for its improvement were developed. The results of the study are of great importance in developing strategies aimed at strengthening the risk management system in banks, harmonizing assets and liabilities, and minimizing interest rate risks.
References
Basel Committee on Banking Supervision, Interest Rate Risk in the Banking Book. Basel, Switzerland: Bank for International Settlements, Apr. 2016. [Online]. Available: https://www.bis.org/bcbs/publ/d368.htm
Basel Committee on Banking Supervision, Principles for the Management and Supervision of Interest Rate Risk. Basel, Switzerland: Bank for International Settlements, Jul. 2004. [Online]. Available: https://www.bis.org/publ/bcbs108.htm
F. S. Mishkin, The Economics of Money, Banking, and Financial Markets, 13th ed. Harlow, U.K.: Pearson, 2022.
J. Bessis, Risk Management in Banking, 4th ed. Chichester, U.K.: Wiley, 2015.
J. C. Hull, Risk Management and Financial Institutions, 5th ed. Hoboken, NJ, USA: Wiley, 2018.
Central Bank of the Republic of Uzbekistan, Financial Stability Report for 2024. Tashkent, Uzbekistan, 2025. [Online]. Available: https://cbu.uz/en/financial-stability/report/
World Bank, Uzbekistan Financial Sector Reform Project (P173619). Washington, DC, USA: World Bank Group, 2022. [Online]. Available: https://documents.worldbank.org/en/publication/documents-reports/documentdetail/341821651843155856
E. Caruso and E. Balaikiene, Uzbekistan - Financial Sector Assessment Program: Detailed Assessment of Observance - Basel Core Principles for Effective Banking Supervision. Washington, DC, USA: World Bank Group, 2025. [Online]. Available: https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099081925064533229
Asian Development Bank, Uzbekistan: Financial Markets Development Program (Subprogram 2), Project 53161-003. Manila, Philippines, 2024. [Online]. Available: https://www.adb.org/projects/53161-003/main
G. Vuillemey, “Bank Interest Rate Risk Management,” Management Science, vol. 65, no. 12, pp. 5933-5956, Dec. 2019, doi: 10.1287/mnsc.2018.3125.
Q. L. Burke and T. D. Warfield, “Bank interest rate risk management and valuation of earnings,” Accounting & Finance, vol. 61, no. 3, pp. 4287-4337, 2021, doi: 10.1111/acfi.12733.
M. Ausloos, Q. Ma, P. Kaur, B. Syed, and G. Dhesi, “Duration gap analysis revisited method in order to improve risk management: The case of Chinese commercial bank interest rate risks after interest rate liberalization,” Soft Computing, vol. 24, pp. 13609-13627, 2020, doi: 10.1007/s00500-019-04376-7.
E. Scannella and D. Bennardo, “Interest rate risk in banking: A theoretical and empirical investigation through a systemic approach (asset & liability management),” Business Systems Review, vol. 2, no. 1, pp. 59-79, 2013.
A. Purnanandam, “Interest rate derivatives at commercial banks: An empirical investigation,” Journal of Monetary Economics, vol. 54, no. 6, pp. 1769-1808, Sep. 2007, doi: 10.1016/j.jmoneco.2006.07.009.
European Banking Authority, Guidelines on IRRBB and CSRBB. Paris, France: EBA, Oct. 2022. [Online]. Available: https://www.eba.europa.eu/activities/single-rulebook/regulatory-activities/supervisory-review-and-evaluation-process-srep-0
Office of the Comptroller of the Currency, Interest Rate Risk, Comptroller’s Handbook. Washington, DC, USA, Mar. 2020. [Online]. Available: https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/interest-rate-risk/index-interest-rate-risk.html
Board of Governors of the Federal Reserve System, “SR 10-1: Interagency Advisory on Interest Rate Risk,” Jan. 11, 2010. [Online]. Available: https://www.federalreserve.gov/supervisionreg/srletters/SR1001.htm
Financial Stability Institute, Treatment of Interest Rate Risk in the Banking Book in Latin America, FSI Occasional Paper No. 12. Basel, Switzerland: Bank for International Settlements, Sep. 2016. [Online]. Available: https://www.bis.org/fsi/fsipapers12.htm
Federal Deposit Insurance Corporation, “Interest Rate Risk,” Banker Resource Center. [Online]. Available: https://www.fdic.gov/resources/bankers/capital-markets/interest-rate-risk/. Accessed: Aug. 4, 2026.
Basel Committee on Banking Supervision, Stress Testing Principles. Basel, Switzerland: Bank for International Settlements, Oct. 2018. [Online]. Available: https://www.bis.org/bcbs/publ/d450.htm
Central Bank of the Republic of Uzbekistan, Monetary Policy Report, 2025 Q4. Tashkent, Uzbekistan, 2026. [Online]. Available: https://cbu.uz/en/monetary-policy/publications/reviews/
International Monetary Fund, Global Financial Stability Report: The Last Mile: Financial Vulnerabilities and Risks. Washington, DC, USA: International Monetary Fund, Apr. 2024, doi: 10.5089/9798400257704.082.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Seitnazarov Daniyar Baxadirovich
This work is licensed under a Creative Commons Attribution 4.0 International License.
In submitting the manuscript to the Central Asian Journal of Innovations on Tourism Management and Finance, the authors certify that:
- They are authorized by their co-authors to enter into these arrangements.
- The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
- That it is not under consideration for publication elsewhere,
- The publication has been approved by the author(s) and by responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
- They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
- They agree to the following license and copyright agreement.
License and Copyright Agreement
Authors who publish with Central Asian Journal of Innovations on Tourism Management and Finance agree to the following terms:
- Authors retain copyright and grant the Central Asian Journal of Innovations on Tourism Management and Finance right of first publication with the work simultaneously licensed under Creative Commons Attribution License (CC BY 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the Central Asian Journal of Innovations on Tourism Management and Finance published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
