Banking's final exam
Subtitle: stress testing and bank-capital reform
By: Morris Goldstein
Series: Policy analyses in international economics -- 106; Policy analyses in international economics -- 106.
Published: 2017
Language: eng
Number of pages: 382
ISBN-13: 9780881327052
Subjects: Asset-liability management; Risk management; Financial services industry; Banking law
Description: In the wake of the global economic and financial crisis, bank supervisors in the United States and the European Union carried out a set of "stress tests" over the 2009-15 period. The objective was to determine which banks could survive severely adverse economic scenarios and to order corrective measures for vulnerable institutions. How effective was this exercise? In Banking's Final Exam, one of the world's leading experts on banking regulation concludes that the tests administered on both sides of the Atlantic suffered from several fundamental weaknesses that, unless corrected, can produce a false reassurance about the safety and soundness of the banking system. The author recommends a number of important steps for the future design and conduct of these tests, arguing that they are needed if stress testing is to become the central pillar of bank supervision worldwide.
Notes: Includes bibliographical references (pages 339-362) and index.
Table of contents: title: Introduction; title: Why didn't the EU-wide stress tests receive a better reaction?; title: Operational features and evolution of the US and EU-wide tests; title: Criticisms of stress-testing methodology and of the measurement of bank capital; title: What we have learned, or should have learned, about the right level of bank-capital ratios; title: Estimating capital surcharges for global systemically important banks; title: Lessons from the US and EU-wide tests; title: A plan for bank-capital reform; title: Potential objections to the plan for bank-capital reform and closing remarks; title: Postscript.