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Stress testing banks: an international comparison
Working paper

Stress testing banks: an international comparison

Luigi Vena
SSRN, (24 February 2017), pp.1-44
Elsevier
2017

Abstract

Stress tests Macroprudential supervision Market reaction
In the aftermath of the great financial crisis, the financial supervision changed its focus from micro to macroprudential. Matching the key features of each procedure so far conducted with the review of the analyses concerning the market reactions caused by their disclosure we find that stress tests can sooth panic and restore market confidence only when conducted during crisis period, built on severe yet plausible scenarios and accompanied with a credible institutional recapitalization mechanism.
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