Borrowers have much greater information on their own credit quality than do the lenders and it is this asymmetry that has traditionally meant that the creditor has to have an enduring relationship with the borrower so that his or her credit quality can be monitored on a continuous basis. Banks therefore have traditionally had to invest considerable resources in performing this function.
They have had the incentive to do so since they had borne the credit risk on their books. However, in many countries, from being originators of loans and bearers of risk, banks have become mere originators of loans and distributors of risk, because the traditional view of the role of banks has changed considerably in recent years.