-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To … a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …

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 … concentrated among risky borrowers. Stress tests do not, however, reduce aggregate credit. Small banks increase their share in …