Loan sales revolutionize banking industry, opening new market opportunities.
Banks used to not sell loans because they might not care about the borrower's ability to pay back. But in the 1980s, loan sales increased a lot. Researchers made a model to show how banks can sell loans in a way that still makes them care about the borrower. They found that this kind of loan sale has special features that make sure the bank still cares about the borrower's ability to pay back.