Regulators can be a lot nicer to banks if they just promise to audit them more often.
March 19, 2026
Original Paper
Frequent Stress Tests 
SSRN · 6344838
The Takeaway
Standard logic suggests that 'tougher' tests are the only way to ensure bank safety. However, this research finds that frequency acts as a substitute for stringency; by increasing how often they check a bank's health, supervisors can maintain credibility and prevent bank runs even with lower passing requirements for each individual test.
From the abstract
Bank supervisors employ stress tests and disclose valuable information about banks to the stakeholders. Such tests are also conducted frequently. A credible stress test design must incorporate the stakeholders' strategic responses to test results and ensure that a bank that passes a stress test does not subsequently fail, even under the most adverse equilibrium. To study credible stress tests, we analyze bank run as a canonical regime change game under incomplete information and asynchronous mov