Bank Stress Tests

Introduction In the wake of the 2008 global financial crisis, a little-known process has been brought into the spotlight: the bank stress test. This is an analysis conducted under hypothetical, challenging economic scenarios designed to determine whether a bank has enough capital to withstand the impact of adverse developments. This blog post aims to introduce and shed light on the complex, yet fascinating world of bank stress tests. The Purpose of Bank Stress Tests Stress tests serve a critical role in maintaining financial stability. They help regulatory bodies identify vulnerabilities…