This article deals with the process of financial intermediation: that is, savings and investment flows that are intermediated through organizations such as banks and insurance companies. There are five major topics: stylized facts about financial intermediary organizations and markets; the history of thought about financial intermediation; the theory of financial intermediaries, with an aside on equilibrium credit rationing; the regulation of financial intermediation; and trends in recent research and open research questions.
KeywordsAsset transformation Bank runs Banking crises Banks Corporations Default risk Deflation Delegated monitoring Deposit insurance Discount window Equilibrium credit rationing Ex post monitoring Financial intermediaries Financial Intermediation Financial markets Fractional reserve banking Friedman rule Great Depression Information economics Interest rate risk Liquidity Monetary policy Payment services Private information Safety net (financial) Savings and loan industry
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