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2015, vol. 44, iss. 1, pp. 26-47
Mechanism and accounting treatment of interest rate swap
Master World d.o.o.

emaildanicaprosic@eunet.rs
Keywords: cash flow discounting; fair value; interest rate risk; interest rate swap; hedge accounting
Abstract
Interest rate swap is a derivative which is today routinely used in the financial sector worldwide. As opposed to that, the swap market in Serbia is reduced to basic versions of interest rate swaps only, and is limited to the major users and providers of services in the financial market. Banks in Serbia have been introducing and promoting interest rate swaps as one of their services rather slowly, which can be deduced from various information on interest rate swaps and non-innovative offers of these instruments. On the other hand, companies are unable to recognize interest rate swaps as instruments of hedge against the negative effects of interest rate fluctuations, and a way to gain competitive edge in relation to other market participants. One of the obstacles for using interest rate swaps is unwillingness of companies to get informed and educated, and to enter new transactions. The volume of conducted swap transactions depends on the level of understanding on the part of their participants. Expansion of knowledge helps bridge the gap between theory and practice, thereby encouraging a more intensive implementation of interest rate swaps in the future.
References
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About

article language: Serbian, English
document type: Original Scientific Paper
DOI: 10.5937/bankarstvo1501026P
published in SCIndeks: 24/06/2015

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