interest rate basis (variable rate products)

Hi All,

I am modeling a retail bank. I have read on the forum that it is best to include interest rates as measures, which I will do. What I am trying to figure out is what to do with interest rates that are dependent on some other rate (bank rate, libor). For example, a variable loan rate could have the rate of 10% (fixed) or libor +5% (floating).

Any thoughts?

Thanks,

Ivan

Why would they be any different?

Hi Ivan,

I'm imagining a dimension attribute e.g. "Interest Rate Dependancy", with values of "fixed" or "libor + 5%" .

The actual rates at points in time would stay in your fact.

Mike

boxesandlines - one is based on a variable rate and a spread, the other is simply a static rate. So, having the fixed rate in the fact table as is makes sense to me. Not sure what to do with the variable rate scenario. Not sure if I want this cube to do too much, but a useful piece of information for further analysis is whether the rates would change depending on the reference rate (for ALM analysis).

Mike, I guess I could include a variable/fixed attribute in the stripped down dimension (where loans, and deposit products coexist). one thing I am thinking though, is that if I had a "libor+5%) string dependant on the spread, then I would not be able to do any calculation against it.

By "actual rates staying in the fact table", do you mean to add the reference rate + the spread and include that number in the fact table for variable rates?

thanks for the comments.

"reference rate + the spread in the fact table" - makes sense to me.