The Evolution of Financial Services in the United States

Robin Greenwood (), Robert Ialenti and David Scharfstein ()
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Robin Greenwood: Harvard Business School, Boston, Massachusetts, USA
Robert Ialenti: Analysis Group, Montréal, Quebec, Canada
David Scharfstein: Harvard Business School, Boston, Massachusetts, USA

Annual Review of Financial Economics, 2025, vol. 17, issue 1, 189-206

Abstract: This article surveys the literature on the historical growth and transformation of the US financial sector. The sector expanded rapidly between 1980 and 2006, during which its contribution to GDP rose from 4.8% to 7.6%. After the global financial crisis, the size of the sector stabilized at approximately 7% of GDP. After reviewing this literature, we examine recent developments, including the continued growth of high-fee alternative asset management and the shift away from banks to lending by nonbank financial intermediaries. We interpret both the growth and recent evolution of the sector as reflecting a continued transition to a more market-based financial system, with risk migrating away from banks and into markets.

Keywords: credit intermediation; financial sector; securities (search for similar items in EconPapers)
JEL-codes: G1 G20 N22 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1146/annurev-financial-082123-105625

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