So far, there's not much detail. The idea behind a bank stress test is to look at the bank's financial strength to see how (or if) it can stay afloat in difficult times. If the economy worsens and bank difficulties increase, will the bank fail?
Banks have always had to provide information to regulators, and they've probably run scenarios themselves to manage risk. Unfortunately, risk has been difficult to measure and predict. Presumably, the stress tests will evaluate how banks will do in a worst-case-scenario.
What happens if a bank 'fails' the stress test? Again, the details are still fuzzy. Fuzziness has been part of the problem all along. We're not sure how strong the banks are, and some claim that a few of the largest banks are already insolvent. Ideally, bank stress tests will let us see who's weak and who's strong so that the weak ones can stop inflicting damage on themselves and the economy.
Dear Sir, can we little specific about the topic?
Just wondering if you’ve found a good plugin to show two pages of comments. I remember you mentioned something about it a couple months ago.
It doesn’t say anything about WHAT A STRESS TEST IS, except that it’s NOT known clearly. Then why the misleading heading?
Stress Test for banks is what to be explained. What factors it considers, in what circumstances, and so on. More so, what the test results mean…
I hope we could learn how such tests be performed.
We also need to know if these tests can be performed in any country, or there are different measures for each country.
yes, we are facing with lots of banking difficulty because of liquidity crisis and now we need to see the sufficiency of bank in number, does stress test help for it, it would be better how is it computed?