disintermediation

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Disintermediation

Withdrawal of funds from a financial_institution in order to invest them directly.

Disintermediation

The act of making a withdrawal from a bank or other financial institution in order to use the funds for investment purposes. For example, one may withdraw $10,000 from his savings account in order to buy a stock without the bank's intermediation. This has become less common with deregulation of banking because more banks can offer investment services, reducing the incentive to withdraw.

disintermediation

The withdrawal of funds from financial intermediaries such as banks, thrifts, and life insurance companies in order to invest directly with ultimate users. Disintermediation was more of a problem when financial intermediaries were limited in the returns they could pay to savers. Deregulation of financial intermediaries was intended to dampen the periodic swings toward disintermediation. Compare intermediation.

disintermediation

a situation where a FINANCIAL INTERMEDIARY such as a BUILDING SOCIETY is forced to reduce its lending operations because of the withdrawal of deposits from it and because it is unable to attract new funds. Disintermediation usually occurs (and then only temporarily) when an intermediary (see INTERMEDIATION) fails to adjust its borrowing rates on deposits promptly when interest rates rise, so its rates are insufficiently competitive vis-à-vis other deposit-taking institutions.

disintermediation

The situation that exists when depositors withdraw their savings from financial institutions and invest the money directly in the marketplace,usually because they can obtain a higher yield even though also running a higher risk of losing their money.

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The advent of the Internet, the rise of cybermediaries, and the reintermediation of supply chains, all leave in question the future of traditional intermediaries.
We also see the occasional instance of reintermediation in which middlemen are put back into the supply chain to better serve small accounts or customers with special needs.
With the Internet, firms may attempt to establish a more focused customer orientation as well as alter the industry value-chain through disintermediation or reintermediation.
In both instances, compressed loan spreads occurred during policy tightenings, and hence reintermediation occurred whereby arbitraging commercial borrowers shifted from pricier commercial paper and other sources to cheaper bank loans, often borrowing under prearranged lines of credit.
29] Nissen has pointed out that reintermediation is not limited to intermediaries that have been previously pushed out of a market.
eScout's marketplace network enables the reintermediation of its member banks and partners into the e-commerce transactions of their customers, enabling financial success for the businesses and communities they serve.
By taking distributors to the Web, reintermediation companies improve their product depth, sales productivity and servicing, the report said.