Is there a case for a less severe equity stress test following 2008 returns?
Last updated 11th May 2009 - Read this latest Insights report authored by John Hibbert, Founder & Director
Modern capital adequacy regimes require firms to set aside sufficient capital to survive extreme market and non-market events in order that they can meet their obligations with a high level of confidence. The assessment of these extreme possibilities is an inherently difficult task. In setting stress tests for capital assessment, regulators have taken care to avoid ‘pro-cyclicality’. From the authorities’ perspective, pro-cyclicality carries two major downside risks. Read the report here
