Components

Case

ISU Credit Union and the Great Recession: Asset-Liability Management Issues

Robert Tokle, Idaho State University Joanne Tokle, Idaho State University
June 1, 2013
SKU:
BUS-007491
Region: 
North America
Topic: 
Accounting & Finance
Length: 
17 pages
Keywords: 
Capital, GAP, risk, credit union
Student Price: 
$4.00 (€3.44)
Average rating: 
0

Idaho State University Credit Union (ISU CU), despite being a well-managed depository institution, had to deal with the fallout of the worst recession since the Great Depression. As its capital-asset ratio fell precipitously, it successfully restored its capital with three strategies, but in turn these actions lead to increased interest rate risk. A basic measure of interest rate risk is called the “GAP.” This case describes actions by the Asset-Liability Management Committee (ALCO) to respond to these conditions and keep the GAP within acceptable levels, and explains how to perform a GAP analysis and interpret the results.

Learning Outcomes: 
  1. Explain how actions intended to increase the capital-asset ratio impacted other aspects of the management of the financial institution.
  2. Perform a GAP analysis for a credit union.
  3. Identify factors that affect the GAP and analyze their impacts.
  4. Evaluate strategies that affect the GAP and assess their impacts.

This descriptive case is appropriate for a junior/senior level finance, money and banking, and/or financial institutions course.