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 …

business, including technical innovationssuch as credit scoring, regulatory regime shifts such as toughened bank supervision … availability of credit to small businesses. Small businesses have fewer alternatives to external finance than do large companies. A …, asset-based lending, credit scoring, and relationship lending; lending is compared with the other technologies in terms of …

Bank capital is an important determinant of secondary market liquidity of loans that a bank originates and syndicates …. Higher bank capital is associated with significantly narrower loan bid-ask spreads. This effect is stronger when banks are … to bank capital generated by housing market exposures and the 2012 JPMorgan ‘London Whale' incident are suggestive of …

We find that credit lines (CLs) play special roles in syndicated lending, committing lead banks to screen, monitor, and … the primary market and narrower bid-ask spreads in the secondary market. Findings support the Bank Specialness Hypothesis … bankruptcy as a quasi-natural experiment confirm our conclusions. Our tests extend the literature on bank specialness, the value …