The Knowledge Jabber material of Stress Test Bulletins
Luca Guerrieri and Michele Modugno
We exploit institutional aspects of the U.S. banking stress exams to disentangle varied sorts of files garnered by market contributors when the stress test outcomes are launched. By analyzing the reaction of assorted asset prices, we discover proof that market contributors price the stress test announcements not precise for the easy job on in all probability future capital distributions but also for the indicators about bank resilience. These outcomes support the utilize of stress exams by central banks to expose the broader public in regards to the soundness of the banking system.
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February 24, 2021