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Stress Testing Interconnected Banking Systems

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Advances in Financial Risk Management

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Abstract

The recent financial crisis turned the spotlight on the issue of stress testing financial institutions. Until the crisis, risk monitoring and stress testing were built around the safety and soundness of individual institutions. In the aftermath of the crisis, stress tests adopted a new role by incorporating elements of the increased interconnectedness among banks, brokers, insurance companies, and hedge funds. Indeed, for many years after the crisis, stress test models failed to incorporate this interconnectedness and the amplification of distress triggered by financial sector institutions.

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Authors
  1. Rodolfo Maino
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  2. Kalin Tintchev
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Editor information

Editors and Affiliations

  1. Monash University, Melbourne, Australia

    Jonathan A. Batten

  2. Hong Kong University of Science and Technology, Hong Kong

    Peter MacKay

  3. Department of Business and Economics, University of Passau, Germany

    Niklas Wagner

Copyright information

© 2013 Rodolfo Maino and Kalin Tintchev

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Cite this chapter

Maino, R., Tintchev, K. (2013). Stress Testing Interconnected Banking Systems. In: Batten, J.A., MacKay, P., Wagner, N. (eds) Advances in Financial Risk Management. Palgrave Macmillan, London. https://doi.org/10.1057/9781137025098_7

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