Paper short abstract:

In the aftermath of the crisis EU regulators decided to measure banks' health by means of a stress test. The paper addresses how this indicator coproduces knowledge and coconstitutes the problem of 'financial health'. To this end a number of interviews were conducted in banks and consultancy firms.

Paper long abstract:

Systemic banking stress tests are becoming an influential indicator in European financial policies. They present themselves as an objective indicator of banks' health. Indicators like these are often seen as technical measures, calculated by independent experts. As such, they have the ability to remove a problem from the realm of the political, and recast it in the neutral language of science (Rose & Miller, 2008).

The creation of such indicators, raises the question of calculative power. Objects are isolated from their context, imposed to similar manipulations and summed up for comparison. This knowledge then contributes to the continuation of this socio-political order by affirming its assumptions and logic (Jasanoff, 2006; Latour, 1987). In this paper I aim to understand how the stress test co-constitutes the problem of 'financial health' facing banks in the aftermath of the crisis.

Indicators do not 'just calculate' a numerical value. They select and simplify specific characteristics and render others invisible or irrelevant. As such calculation is a political act. Along these lines it is also important to see changes in measure as an important sense making activity (Porter, 1986). As such, replacing old indicators with new ones in turbulent periods, reduces crises to crises of measurement (Callon & Muniesa, 2005).

To answer the research question I conducted a number of interviews with actors in all four of the Belgian banks included in the 2014 stress test as well as consultancy firms. I started the interviews in 2015 and continued throughout the 2016 stress testing procedure.