Cutting out the middleman financial definition of Cutting out the middleman
disintermediation (redirected from Cutting out the middleman)
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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.
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.
References in periodicals archive
Provider-Sponsored networks (PSNs) are an emerging market option in sophisticated managed care markets, where buyers and sellers are cutting out the middleman
For community-minded fundraisers, that helps serve as a mark of assurance -- and the 10 to 25 percent they save by cutting out the middleman
doesn't hurt, either.
com, thereby cutting out the middleman
, and they hit it big