Runs Versus Lemons: Why US Bank Stress Tests Succeeded While Europe's Failed

Runs Versus Lemons: Why US Bank Stress Tests Succeeded While Europe’s Failed by The Conversation At the height of the financial crisis, in February 2009, US authorities announced an innovative policy designed to restore confidence in the financial system: the Supervisory Capital Assessment Program, better known as the stress test. Taking their supervisory duties an unprecedented step further, regulators would reveal to the public detailed bank-by-bank results of a thorough inspection of balance sheets – outing weak banks as such and endorsing the strength of sound ones. With this information, it was hoped, investors would regain their willingness to invest…