Banks turn these loans into a pool of funds and sell all these loan assets to SPV, which will issue securities based on this pool of funds. The basis of issuing securities is that these loans will generate stable cash flow.

1, so the bank gave up the cash income after these loans in the process of loan securitization, including principal and interest.

2. Banks make asset securitization loans to enhance liquidity. After all, the cash obtained after the loan is sold can be loaned again, which can greatly increase the amount of bank lending. Originally, the credit scale of banks was limited, but the process of lending through asset securitization belongs to off-balance sheet business and will not affect the balance sheet. So banks will be willing to securitize assets.

3. The problem of adverse selection may be that people who are short of money are more inclined to apply for loans from banks, but their credit level is not high, which will lead to the instability of future cash flow, thus making the income of this asset-backed securities unstable and even leading to the problem of being unable to repay loans.