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Disintermediation or financial diversification? The case of developed countries

Author

Listed:
  • Boutillier, M.
  • Bricongne, J.C.
Abstract
Measuring an intermediation rate is a good way of capturing the importance of the role of financial intermediaries in a given economy and their position in the face of the growth in market financing. Results show a quite sizeable decline in the financial intermediation rate in France over the period concerned, characterised by the strong growth of capital markets and the increasing use made by non-financial agents of non-intermediated financing. This development should nevertheless be treated cautiously, for several reasons. First, because it stems largely from the internationalisation of the financing and investing movements of resident financial institutions (FIs) and of market financing received by non-financial agents. Thus, an increasing proportion of resident FIs' assets are held vis-à-vis non-residents and a growing share of the financing received by residents comes from the "Rest of the world", mainly from non-resident FIs. Second, because an analysis of the revenue of financial intermediaries confirms the change in their price setting practices and a shift in their activities. Lastly, because the choice by non-financial agents is not only made between intermediaries and direct-market access. First of all, this article analyses the changes in the intermediation rate in France and abroad. A growing share Is accounted for by the Rest of the world, while the financing of the national economy by resident FIs has declined. Conversely, resident FIs have developed their operations with the Rest of the world. A broader concept of intermediation is then proposed in order to deal with the so-called decline in financial intermediation. A complementary view of intermediation revenue makes it possible to measure the developments in resident FIs' earnings and to understand the changes that have enabled them to maintain their revenue.

Suggested Citation

  • Boutillier, M. & Bricongne, J.C., 2012. "Disintermediation or financial diversification? The case of developed countries," Working papers 380, Banque de France.
    • Handle: RePEc:bfr:banfra:380
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    Cited by:

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    2. Cécile Bastidon, 2013. "Un modèle théorique d'intermédiation : transmission et gestion des chocs," Post-Print hal-00806524, HAL.

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    More about this item

    Keywords

    financial intermediation rate; intermediation aggregates; financial intermediaries; international financial integration; geographical diversification of investments; banks' price scale fixing; intermediation revenue; financial intermediation services indirectly measured (FISIM); production of financial institutions.;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G2 - Financial Economics - - Financial Institutions and Services

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