Post-crisis stress tests have altered banks' credit supply to small business. Banks affected by stress tests reduce credit supply and raise interest rates on small business loans. Banks price the implied increase in capital requirements from stress tests where they have local knowledge, and exit...

Post-crisis stress tests have altered banks' credit supply to small business. Banks most affectedby stress tests reallocate credit away from riskier markets and toward safer ones. They also raiseinterest rates on small loans. Quantities fall most in high-risk markets where stress-tested banksown...

In March of 2020, banks faced the largest increase in liquidity demands ever observed. Firms drew funds on a massive scale from pre-existing credit lines and loan commitments in anticipation of cash flow disruptions from the economic shutdown designed to contain the COVID-19 crisis. The increase...