How Company-Run and Fed DFAST Projections Measure Up

Since the 2009 launch of the Federal Reserve’s Supervisory Capital Assessment (SCAP) program, the stress testing exercises have become deeply rooted in banking supervision and are partly why U.S. banks have doubled their capital. There is also a growing body of literature that examines the impact of stress testing and other changes to regulatory capital requirements on lending to various categories of borrowers. For example, the stress testing programs are reported to have reduced the ava…