Banks face distinct vulnerabilities to interest rate fluctuations based on their structural characteristics. In many emerging market economies (EMEs), banks often engage heavily in maturity transformation—funding long-duration fixed assets (like long-term corporate loans or infrastructure project financing) with short-term liabilities (like retail and corporate deposits). This approach exposes them to significant maturity mismatch risk. When interest rates rise unexpectedly, the cost of short-term funding increases rapidly while the yield on long-duration fixed-rate assets remains unchanged, severely compressing net interest margins.