Next Article in Journal / Special Issue
Financial Stability Board: Mandate and Implementation of Its Systemic Risks Standards
Previous Article in Journal
Dilemmas and Challenges in the Marketing of Hybrid Organizations: A Theoretical Exploration of Dutch Sheltered Work Companies
Previous Article in Special Issue
Bank Regulation in Dollarized Economies: The Case of Turkey
Article Menu

Export Article

Open AccessArticle
Int. J. Financial Stud. 2014, 2(1), 15-81; doi:10.3390/ijfs2010015

Credibility and Crisis Stress Testing

Monetary and Capital Markets Department, International Monetary Fund, 700 19th Street, NW, Washington, DC 20431, USA
Author to whom correspondence should be addressed.
Received: 4 September 2013 / Revised: 30 December 2013 / Accepted: 21 January 2014 / Published: 17 February 2014
(This article belongs to the Special Issue The Future of Banking Regulation and Financial Stability)
View Full-Text   |   Download PDF [861 KB, 18 February 2014; original version 17 February 2014]   |  


Credibility is the bedrock of any crisis stress test. The use of stress tests to manage systemic risk was introduced by the U.S. authorities in 2009 in the form of the Supervisory Capital Assessment Program. Since then, supervisory authorities in other jurisdictions have also conducted similar exercises. In some of those cases, the design and implementation of certain elements of the framework have been criticized for their lack of credibility. This paper proposes a set of guidelines for constructing an effective crisis stress test. It combines financial markets impact studies of previous exercises with relevant case study information gleaned from those experiences to identify the key elements and to formulate their appropriate design. Pertinent concepts, issues and nuances particular to crisis stress testing are also discussed. The findings may be useful for country authorities seeking to include stress tests in their crisis management arsenal, as well as for the design of crisis programs.
Keywords: asset quality review; financial backstop; hurdle rates; restructuring; solvency; transparency; EBA; PCAR; SCAP asset quality review; financial backstop; hurdle rates; restructuring; solvency; transparency; EBA; PCAR; SCAP
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

Scifeed alert for new publications

Never miss any articles matching your research from any publisher
  • Get alerts for new papers matching your research
  • Find out the new papers from selected authors
  • Updated daily for 49'000+ journals and 6000+ publishers
  • Define your Scifeed now

SciFeed Share & Cite This Article

MDPI and ACS Style

Ong, L.L.; Pazarbasioglu, C. Credibility and Crisis Stress Testing. Int. J. Financial Stud. 2014, 2, 15-81.

Show more citation formats Show less citations formats

Related Articles

Article Metrics

Article Access Statistics



[Return to top]
Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top