Loan Sale Market

Paper Summary:

This paper discusses the loan sale market and the participation of two different banks, the Bank of Montreal, and the Bank of Nova Scotia, noting that loan sale takes place when a financial institution originates a loan and then sells it to another institution. The paper further discusses how when loans are sold or traded, no new securities are created. The loan sale market is the market through which such transactions are made, and various institutions engage in this sort of transaction. As a rule, this means that a larger bank helps out a smaller bank and so reduces the risk to the smaller bank.

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