Publication
This paper estimates the impact of stress-testing on lending spreads. We use firm-level data onsyndicated loans matched with bank holding company (BHC) data in our panel regressions.Using a difference-in-difference framework, we find: (1) BHCs that failed the stress testsincreased their loan pricing; (2) Loan pricing is higher for all BHCs after the commencementof the stress tests. These findings suggest that stress-test failure leads to higher spreads in thesyndicated loan market after the great financial crisis.
Christophe Marcel Georges Galland, Valeria Vento, Sachin Suresh Verlekar, Philippe Andreas Rölli
Katie Sabrina Catherine Rosie Marsden
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