The U.S. bank stress tests aim to improve financial system stability. However, they may also affect bank credit supply … Hypothesis, under which stress-tested banks reduce credit supply – particularly to relatively risky borrowers – to decrease their … credit risk. The findings do not support the Moral Hazard Hypothesis, in which these banks expand credit supply …

We examine the relation between the financial health of banks and their willingness to supply capital to borrowers … last quarter of 2007 and the first half of 2008, banks with higher exposure to conduits renegotiated significantly tougher … financial crisis (2007-2010), we find that a worsening in financial health at banks led to a lower probability of waivers …

We study how the consequences of violations of covenants associated with bank lines of credit to firms vary with the … financial health of lenders. Following a violation banks restrict usage of lines of credit by raising spreads, shortening … is fairly stable during the period 2002-2011, the reaction of banks to violations became significantly more restrictive …

dimensions: (i) the role of under-capitalized banks, (ii) effects on zombie firms, and (iii) spillovers and distortions for non …

. Granular European data on inflation, firms, and banks confirm this mechanism. Industry-country pairs affected by a rise of …