The literature finds that bank liquidity significantly affects loan sales (Pavel and Phillis 1987, Berger and Udell 1993). Pavel and Phillis (1987) note that, if loan sales are "primarily influenced by other factors such as liquidity and diversification, then perhaps asset sales should be encouraged to improve the soundness of the banking system." Using bank survey data, they find a positive and significant relationship between bank liquidity and the prospects for selling a loan (either outright, through participations and syndications, or securitization). Dennis and Mullineaux (2000) use a loan-growth variable as a rough proxy to measure the liquidity constraints of lead arrangers. A higher liquidity constraint is associated with a higher probability that banks will form and participate in a loan syndicate, other things being equal.