Work

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

Year: 2012

Type: report

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.

Source: National Bureau of Economic Research

DOI: 10.3386/w18077

Author: Thomas Philippon

Institutions: National Bureau of Economic Research, New York University, Paris School of Economics, Stanford University

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: Smith Richardson Foundation, Sid W. Richardson Foundation

OpenAlex ID: W2164782284

Cites: 107

Cited by: 192

Related to: 10