Loan sales as a response to market-based capital constraints

Charles Carlstrom and Katherine A. Samolyk

No 9313, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: A model of bank asset sales in which information asymmetries create the incentive for unregulated banks to originate and sell loans to other banks, rather than fund them with deposit liabilities. Private information implies that bankers can fund local loans only to the extent that their capital can absorb potential losses. Loan sales are effectively a means of employing nonlocal bank capital to support local investments.

Keywords: Bank capital; Bank loans (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (11)

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Journal Article: Loan sales as a response to market-based capital constraints (1995)
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