Bank Stress Testing, Human Capital Investment and Risk Management / Thomas Schneider, Philip Strahan, Jun Yang.

Format:

Book

Author/Creator:

Schneider, Thomas.

Contributor:

National Bureau of Economic Research.

Strahan, Philip.

Yang, Jun.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30867.

NBER working paper series no. w30867

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This paper studies banks' investment in risk management practices following the Global Financial Crisis and the advent of stress testing. Banks that experienced greater losses during the Crisis exhibit stronger demand for risk management talents. Banks increase their demand for highly skilled stress test labor in anticipation of a test and following poor performance on a test. Following this higher demand, banks exhibit lower systematic risk and lower profitability. While stress testing has modernized banks' internal risk management by spurring the acquisition of highly skilled risk management talent, recent changes to the tests could erode its efficacy.

Notes:

Print version record

January 2023.