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.