Default risk is related to the inability of a borrower to reimburse a loan or a bond.
However, this is associated with relatively low levels of internal resources held by borrowers.
Over time, as increasing numbers of producers gain access to external finance, borrowers' net worth rises relative to debt.
These costs arise through informational asymmetries between borrowers and lenders that are costly to resolve.
If each agent's endowment level increases, then the relative wealth differences between the lenders and the borrowers really decrease.
Some foreign banks flush with silver money in their coffers in some seasons of the year had to seek out borrowers.
This coincides with the sharp enhancement of in-house capacity and capability to assist borrowers on environmental project and programme formulation.
A pivotal bank function, therefore, is to intermediate between savers who demand complete liquidity and borrowers who require non-marketable loans.
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