Should Banks' Stress Test Results be Disclosed? An Analysis of the Costs and Benefits

Itay Goldstein and Haresh Sapra

Foundations and Trends(R) in Finance, 2014, vol. 8, issue 1, 1-54

Abstract: Stress tests have become an important component of the supervisory toolkit. However, the extent of disclosure of stress-test results remains controversial. We argue that while stress tests uncover unique information to outsiders — because banks operate in second--best environments with multiple imperfections — there are potential endogenous costs associated with such disclosure.

Keywords: Disclosure; Financial reporting; Bank stress test; Risk management; Financial regulation (search for similar items in EconPapers)
JEL-codes: G01 G10 G18 G21 G23 G32 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (95)

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Persistent link: https://EconPapers.repec.org/RePEc:now:fntfin:0500000038

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