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The ALM framework: repricing gap, earnings and economic value

Module 01 / 5 · 65 min · Free preview

Measure how a change in the National Bank Rate flows through a bank's earnings and economic value, and read the result the way an ALCO must.

In this module you will learn to

  • Explain what asset and liability management covers and how the ALCO uses it
  • Describe the interest-rate-based monetary framework, the National Bank Rate and its corridor
  • Build a repricing gap and compute earnings at risk for a rate shock
  • Estimate the change in economic value of equity from duration
  • Assess how high inflation and the end of the credit growth cap change ALM decisions

Built on

  • Erudite Africa course specification: Topic 1.g Treasury and Forex Management, Level 2 Intermediate (October 2026)
  • Erudite Africa: Training Module, Ethiopian Context, programme overview and regulatory register (October 2026)
  • National Bank of Ethiopia Proclamation No. 1359/2025 and NBE Monetary Policy Committee release No. 7 (13 July 2026)
  • NBE directives as listed in the lessons: FXD/01/2024, FXD/04/2026, FXD/05/2026, SBB/92/2024, SBB/95/2025, SBB/96/2025, NBE/INT/13/2026
  • NBE Risk Management Guidelines (May 2010)

Examples and companies are fictional. Bank practices are shown as typical Ethiopian practice, not as any one bank's policy. Always apply your own institution's approved policy and the current NBE directives.