what is a bank stress test 
a bank stress test is an analysis conducted under hypothetical scenarios designed to determine whether a bank has enough capital to withstand a negative economic shock these scenarios include unfavorable situations such as a deep recession or a financial market crash in the united states banks with 50 billion or more in assets are required to undergo internal stress tests conducted by their own risk management teams and the federal reserve 1bank stress tests were widely put in place after the 2008 financial crisis many banks and financial institutions were left severely undercapitalized the crisis revealed their vulnerability to market crashes and economic downturns as a result federal and financial authorities greatly expanded regulatory reporting requirements to focus on the adequacy of capital reserves and internal strategies for managing capital banks must regularly determine their solvency and document it 2