Testing serves two different purposes. It not only shows the student's progress, it's an method of the teacher evaluating whether or not the information is getting through.
You will have some students that aren't good at testing, but perform well in class, and others that do the opposite, so it's also a method of giving both kinds of students a place to "shine". "Performing under pressure" isn't all it's cracked up to be in most testing circumstances, because most MA players have a few base techniques that they depend on, and having 10 million that can be called up on demand won't change their response in "real" circumstances.
Personally, I hate the tests that take all day, because it's nothing more than an ego trip to make somebody jump through the hoops until they drop. If you aren't getting any information out of the testing, it's useless.
There has to be some balance in how tests are conducted... and there should be "new information" coming out of it. If all you're testing for is to award another rank, you can do that in class without all the hoopla... but of course, that would do away with all those pesky "testing fees".
Time for your next test... cha ching....