# Short selling limits and institutional ownership

Why is Institutional holding considered a proxy for short-sale costs? In other words, Why are firms with lower institutional ownership more likely to be a subject of short-sale constraints?

For example Asquith, Pathak, and Ritter (2005) use institutional ownership as a proxy for the lendable supply of shares and define short sale-constrained stocks as having both high RSI (relative short interest) and low institutional ownership.