Further analysis of the stress test of banks’ capital adequacy in Financial Stability 2/2010
Gøril Bjerkhol Havro, Cathrine Bolstad Træe and Bjørn Helge Vatne
Economic Bulletin includes more detailed information about the stress tests that are presented in the report series Financial Stability. In the tests, banks’ accounts are projected over a four-year period. In this analysis, the construction of the stress alternative in Financial Stability 2/2010 is presented as well as the sensitivity of the results to changes in key assumptions. The results of the stress tests show that banks can maintain a sound level of capital adequacy even if economic growth should prove to be weak several years ahead. A broad range of sensitivity analyses show that banks can also absorb more severe economic shocks than those incorporated in the stress test.
(Article added: 4 March 2011)