The duration of the bank's loan book dictates how susceptible the bank is to rate changes. If the bank holds everything in short duration T-Bills, then rate in

The duration of the bank's loan book dictates how susceptible the bank is to rate changes. If the bank holds everything in short duration T-Bills, then rate increases don't impact them negatively in any meaningful way. Of course, the whole premise of making money via banking is to get a spread over the risk free rate. Fixed rate debt actually creates all kinds of distortions throughout the economy. If banks held all floating rate debt, then rate increases also wouldn't matter (outside of increased credit risk) as the rate hikes get baked into the interest they accrue on the loan. Mortgages are another example of a fixed rate distortion. You can see how frozen the market is due to all of the fixed rate debt issued far below what a non-fed intervention market price would have been. In most countries mortgages are majority floating rate, which leads to better responsiveness of price to changing conditions. In the end it will trend back to equilibrium anyway, just takes longer.