Re-intermediation financial definition of re-intermediation
disintermediation (redirected from re-intermediation)
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Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive
Eventually, he said, business-to-business models will evolve so that there will be re-intermediation
opportunities along the value chain -- i.e., middlemen will be able to add value at different positions between buyers and sellers and get paid for that service.
The financial crisis of the past year seems to have shifted many Americans' investment perceptions back to the traditional ultra-safe bank deposits so favored by those highly risk-averse in the past -- a process those in the banking and financial industry sometimes describe as "re-intermediation."
Bankers who take strong advantage of the current potential for "re-intermediation" and provide a "safe haven" with a reasonable rate of return may discover that they will benefit greatly, not only in terms of increased deposit growth in the short term, but also in increased customer loyalty/engagement over the long term.