They can help us to explain to the public the sorts of tail events that we worry about, and assist participants and the public in understanding the resilience of individual institutions, and the financial system as a whole, to those risks. That said, there is no direct link between stress tests and our banks’ capital requirements.
It often used to be thought that corruption “greased the wheels of commerce” and helped things get done. But modern research has unequivocally shown the higher the level of corruption, the worse the economic performance.6  •  The second institutional requirement is constraints on the ability of government or other elites to exercise arbitrary power.