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 the reduction in loan purchases is more dramatic among
stress tested banks that failed the exercise. 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.