Reportgreen2012

Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation

192 citations0/0 files storedNational Bureau of Economic Research

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Banking stability, regulation, efficiency Monetary Policy and Economic Impact Economic theories and models

Abstract

I provide a quantitative interpretation of financial intermediation in the U.S. over the past 130 years.Measuring separately the cost of intermediation and the production of financial services, I find that: (i) the quantity of intermediation varies a lot over time; (ii) intermediation is produced under constant returns to scale; (iii) the annual cost of intermediation is around 2% of outstanding assets; (iv) adjustments for borrowers' quality are quantitatively important; and (v) the unit cost of intermediation has increased over the past 30 years.

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References

1983Bank Runs, Deposit Insurance, and Liquidity 1984Financial Intermediation and Delegated Monitoring 1996Financial Dependence and Growth 1985The equity premium: A puzzle 2008Market Liquidity and Funding Liquidity 1998The Financial Accelerator in a Quantitative Business Cycle Framework 1997Financial Intermediation, Loanable Funds, and The Real Sector 2003Income Inequality in the United States, 1913-1998

Cited by

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