tutor2u | Commercial Bank Stress Tests

Student Videos

Commercial Bank Stress Tests

Level:
A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 12 Mar 2020

In this short video on financial economics, we look at stress testing of commercial banks and building societies

Commercial Bank Stress Tests

Stress tests assess commercial banks’ ability to withstand severe shocks, but also to maintain the supply of credit under severe stress.

The Bank of England conducts annual stress tests to check the resilience of the banking system.

When a bank is found to have insufficient capital, then it must take steps to increase their capital reserves.

The 2019 Bank Stress Test for the UK

  • Sterling exchange rate index falls by 28%
  • Monetary policy base interest rates rise to 4%
  • Household property prices fall by 33%
  • Share prices fall 41%
  • Start-to-trough fall in global GDP of -2.6%
  • UK real GDP falls by 4.7%
  • Unemployment rate rises to 9.2%

Recommended

Exam support for 2022

Online Grade Booster Courses for A-Level Exams in May & June 2022

Exam technique, advance information support, live revision and more from the tutor2u subject specialist teams

Enrol now

© 2002-2022 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.