Abstract
One of the most reliable and well-liked methods for signaling bank management of negative repercussions
associated to possible threats is stress testing. It also depicts how much capital adequacy ratio (CAR) may be required to
absorb losses if any substantial shocks occur. As per Bangladesh Bank standards, researchers conducted load testing on 10
Bangladeshi private commercial banks' non-performing loans (NPL), non-performing loans in two key sectors, equity price
risk, liquidity shocks, and interest rate shocks in this article. Data from the annual reports of the chosen banks for the years
2016, 2017, and 2018 were used in this analysis. According to the study, all 10 banks in the years 2016, 2017, and 2018 need
more capital due to the indicator NPL. In 2016, 2017, and 2018, Prime Bank was able to withstand NPL shocks in two crucial
industries. Bank Asia and Jamuna bank were also able to do so in those years. In 2016, 2017, and 2018, four out of ten banks
were able to surpass the shock threshold when it comes to equity price risk. Under the liquidity indicator, none of them can
sustain operations in three years without additional financing. Finally, out of 10 banks, six banks do not need any more capital
when the indicator interest rate is taken into account. The study also highlights certain extra CAR that the banks might enhance
to withstand shocks. Finally, several intriguing study implications are demonstrated in this paper, which may be useful to
senior management, decision-makers, depositors, owners, and other bank stakeholders.
