Analysis On The Stress Testing Legalization Of Commercial Banks

Stress testing ,as one new risk assessment tool , which is employed to assess the commercial banks' maximal lost when abnormal market condition happens. In order to make bank supervision authority entitled to claim commercial banks use this tool to risk management, it is essential to make stress testing legalized.After the introduction of the development and concept of stress testing , this paper presented stress testing procedure and major measures. Besides, this paper gave an overview of the provisions about stress testing in Basel system, USA and Great Britain. Since the Financial Globalization presently, the commercial banks will face much more risk than ever; the Chinese bank supervision authority--China Banking Regulatory Commission (CBRC) have responded to this challenging environment by made this tool legalized.This paper introduced the stress testing regulation made by CBRC, analysed the the current lack of provision, and presented the author's suggestion to improve the related regulations. Since the current global financial crisis is not over yet, and the Basel II will be implemented in China's commercial banks, this paper's object was to introduce stress testing into China and to improve this tool from the legal point of view. The author expected that CBRC would use stress testing in the prospective risk management to prevent risks in banking supervision.