This study shows how post-crisis stress tests have affected the supply
of home equity business loans. Stress tested banks reduce their loan originations
but in terms of purchased loans, this effect is much stronger among stress tested
banks that failed the exercise compared to other groups of banks. The magnitude
of these effects is inversely proportional to the size of the loans. Even though
the aggregate level of credit supply is relatively unchanged, within each size
category of loans adopted in this study, growth rates are directly proportional
to its origination size. The loan distributions significantly differ among stresstested
and non-stress-tested banks and there are significant geographical shifts
in loan originations both by categories of banks and size of loans.