This Article presents a theory for how policymakers should use stress testing as a tool of financial regulation. In finance, a stress test is an exercise gauging how an institution or system will respond to severe, yet plausible, stressed conditions such as stock market crashes, high...

Normal Accident Theory describes the phenomenon by which complex and tightly coupled systems lead inevitably to accidents as a consequence of a system’s design. Some scholars have applied this interpretive lens to describe the inevitability of crises in complex, tightly coupled financial...

This edited collection comprehensively addresses the widespread regulatory challenges uncovered and changes introduced in financial markets following the 2007-2008 crisis, suggesting strategies by which financial institutions can comply with stringent new regulations and adapt to the pressures...

This paper deals with both system-wide and banks' internal stress tests. For system-wide stress tests it describes the evolution over time, compares the stress test design in major jurisdictions, and discusses academic research. System-wide stress tests have gained in importance and nowadays...