Stress test transparency can ‘persuade’ investors, says Bundesbank paper

bundesbank

A discussion paper published by the Deutsche Bundesbank, on December 4, shows banking authorities or institutional supervisors can "persuade" investors to act in a manner that enhances welfare by disclosing their stress-testing methodology along with stress test results.

The authors, Wolfgang Gick and Thilo Pausch, say by conducting stress tests that cover the entire banking sector and choosing an optimal disclosure mechanism, supervisors can deliver superior information to that held by

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