Study Finds that Few US Banks Hedged Interest Rates in 2022

A recent research study in the Social Science Research Network found that only 6% of total bank assets were hedged against interest rate risk and the use of hedging actually declined in 2022, even as rates rose. In the case of Silicon Valley Bank, the protective hedging of their securities portfolio declined from about 12% in 2021 to only 0.4% in 2022. Throughout 2022, a quarter of publicly traded banks had also reduced their protective hedging. The authors published an additional article in March, arguing that 186 banks may be prone to interest rate risks due to reduced hedging.

Read More