Wrong assumptions hinder effective A-L management. (assets and liabilities)

Asset/liability managers should consider the following realities: 1) an analysis of balance sheet behavior should take into account the effect of loan prepayments and early withdrawals; 2) competitive effects, advertising costs, yield curve relationships, loan demand and risk should be examined before changing the maturity/repricing profile of new assets and liabilities; 3) individual asset and liability growth projections must be changed in response to changing rate scenarios; and 4) the spread relationship between asset or liability rates and market interest rates must be adjusted to reflect overall interest rate changes.