Stress test results affect consumer credit – Philadelphia Fed paper


Banks significantly alter their consumer credit offerings if they receive lower-than-expected capital projections from Federal Reserve stress tests, research from the Philadelphia Fed finds.

Sumit Agarwal and his co-authors examine banks’ reactions to negative shocks from the Fed’s stress test results from 2013 to 2017. They define a negative shock as one where the banks’ own capital projections under the adversely severe scenario are higher than the Fed projections.

In the US both the banks

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