Elasticity of Supply-Extra Credit: How might SVB (Silicon Valley Bank) and First Republic respond to future loan origination in the wake of the Banking Crisis?

You've probably heard -what seems to be- of a not too contagious crisis in lending with the near collapse of the above and other banking institutions. How did it occur? Well, basically -and this gets into macroeconomics and finance a tad bit- when interest rates rise, those interest rate sensitive investments lose value because newer, higher paying investments (i.e. paying higher interest) are not sought after.

The banks' mentioned not only held bond portfolios subject to lower rates being paid on those bonds held -thus contributing to their loss in value- but couldn't lend as much money to their clients. When interest rates rise (just like on all our credit cards) loans/borrowing becomes too expensive. Consequently, people stop taking out business loans...banks in turn aren't lending as much money...BUT banks still have to pay (now higher) interest rates on deposits. So, what's called "net interest margin" (the difference between interest income generated from lending and interest expense paid to depositors) gets squeezed. Or bank profits are now smaller. And there's more to it we just won't delve into at this point.

So, what's this got to do with "Y'all" and "extra credit," pray tell?

Simple. Given that you've read up on Elasticity of Supply and you're aware of the formula, how might the banks experiencing this crisis respond in terms of the supply of new loans over the next couple of years given that rates will continue to rise, and, in all probability, the feds may impose tighter capital requirements on banks?

Give me a half page essay explaining how the concept of Supply Elasticity may apply to SVB and First Republic complete with the formula and your "economic" prognostication!