Stress tests to promote financial stability: Assessing progress and looking to the future

Rick Bookstaber, Jill Cetina, Greg Feldberg, Mark Flood and Paul Glasserman

Journal of Risk Management in Financial Institutions, 2013, vol. 7, issue 1, 16-25

Abstract: Stress testing, which has its roots in risk management, should be adapted to support financial stability monitoring and to incorporate the interconnections and dynamics of the financial system. Since the 2008 financial crisis, bank supervisors have honed their financial stability monitoring tools and significantly expanded the use of stress testing in the supervision of the largest financial institutions. This paper describes areas in which further research could contribute to the development of best practices in stress testing and how stress tests can be made more useful for macroprudential supervision. Both near-term and longer-term objectives are discussed.

Keywords: stress testing; financial supervision and regulation; macroprudential policy; risk management; financial stability (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Working Paper: Stress Tests to Promote Financial Stability: Assessing Progress and Looking to the Future (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2013:v:7:i:1:p:16-25

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