Assessing the Effectiveness of Bank Stress Testing

Thesis Abstract

This research project aims to assess the effectiveness of bank stress testing as a risk management tool. Stress testing is a crucial component of bank supervision and regulation, as it helps identify vulnerabilities and assess the resilience of banks to adverse economic conditions. This study will analyze the methodologies and approaches used in bank stress testing, such as scenario analysis and sensitivity analysis. It will evaluate the effectiveness of stress testing in identifying potential risks, estimating potential losses, and informing risk management strategies. The findings of this research will contribute to the understanding of the strengths and limitations of bank stress testing and provide insights for improving its effectiveness.