Loan participations are typically sold to correspondent banks because

Question

Quizplus · Accepted Answer

Correspondent banks have an ongoing relationship with the bank selling the loan participation, which provides a greater opportunity for monitoring and maintaining control over the loan. This is beneficial for the selling bank as it minimizes risk and increases the likelihood of successful loan repayment. Trust and regulatory requirements may also be factors, but the ongoing relationship is the primary reason why loan participations are typically sold to correspondent banks.

Loan Participations Are Typically Sold to Correspondent Banks Because