definition for: #bankstresstesting

Complex and data-intensive, bank stress tests require banks to determine whether their capital levels are adequate to endure the next financial catastrophe by performing a variety of enterprise-wide pro-forma analyses of their institutions under various sets of economic assumptions, some of which are quite adverse. Pro-forma analyses must include the impacts of these various scenarios on a bank's income statement, balance sheet, and cash flow statement, as well as key measures of regulatory capital and liquidity. Bank stress tests are required under several regulatory regimes, including Basel and Dodd-Frank in the United States.