Why commercial banks sell loans: An empirical analysis
Christine Pavel, David Phillis
In this paper, we find that regulatory taxes have an important impact on loan sales, but a bank's comparative advantage in originating and servicing loans and its level of diversification are the primary factors affecting loan sales by commercial banks. The first section discusses the theory behind asset sales. The second and third sections present and discuss a model for predicting whether a firm would sell assets throughout the year, sometimes during a year, or never. The fourth section presents a model to explain the dollar amount of assets that a firm would sell. Finally, the fifth section discusses conclusions and policy implications.
