Ethical Issues in Financial Stress Testing

Kolja Gauer ()
Additional contact information
Kolja Gauer: Edinburgh Napier University

Chapter Chapter 11 in Ethical Discourse in Finance, 2021, pp 223-246 from Palgrave Macmillan

Abstract: Abstract This chapter provides insights on ethical issues inherent in financial stress testing. A simple normative framework is developed based on a set of normative principles. The framework serves as an analytical lens for the ethical discussion of different stress-testing applications. The chapter covers portfolio stress testing on the bank level as well as stress testing for supervisory and surveillance purposes. Prior to the actual discussion the fundamentals of financial stress testing are introduced. This includes the concept of stress testing and a brief historical outline. The ethical discussion shows that several moral principles are relevant for guiding the conduct of stress testing and for regulating between good and bad behaviour. Most notably, the discussion demonstrates that bank regulation and ethics are no substitutes but rather complements that reinforce each other. In this regard, the chapter also contributes to the contemporary debate about rule-based versus principle-based regulation.

Keywords: Bank regulation; Ethics; Financial stability; Moral standards; Normative principles; Stress testing (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:psifcp:978-3-030-81596-7_11

Ordering information: This item can be ordered from
http://www.palgrave.com/9783030815967

DOI: 10.1007/978-3-030-81596-7_11

Access Statistics for this chapter

More chapters in Palgrave Studies in Impact Finance from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().