Re-intermediation financial definition of re-intermediation
disintermediation (redirected from re-intermediation)
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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
com's eCommerce Management Symposium Whether you call it eBusiness, eCommerce, Internet integration, supply chain integration, disintermediation, re-intermediation
, net, vortex or butterfly market transformation, eCommerce management (ECM) or a host other terms.
The marketplace value proposition must extend beyond re-intermediation
to include new ways for participating enterprises to source and deploy IT resources.
The Kemper eSource application demonstrates how the Internet can be a tool of re-intermediation
of Independent Agents, according to Bill Smith, Kemper President and Chief Operating Officer.