First, while even the banks do not know everything about their assets, they certainly have an advantage over the investors, coming from the previous relationship with the borrower. Presence of collateral further increases the asymmetry and the cost of investor due diligence. Furthermore, investors may fear that banks cherry-pick the best assets for themselves, thus reducing the quality of portfolios offered on sale.
Beyond market failures, regulatory and features of the judicial system, such as structural inefficiencies in debt and collateral enforcement, also contribute to the lack of market turnover. Legal procedures needed to collect a simple claim take too long and cost too much in many euro area countries.