We argue that the bank advantages and incentives to monitor are likely to be preserved even in the presence of loan sales in the secondary market. 4 First, the lead bank, which typically holds the largest share of a syndicated loan (see Kroszner and Strahan (2001)) rarely sells its share of a loan in order to preserve its banking relationship with the borrower. As a result, it continues to monitor its loans to the borrower. Second, not all participants in a loan syndicate sell their share of a loan, and therefore continue to have incentives to monitor. Finally, the changing role of banks, from loan originators to loan.
