Changing Role of Banks in the Financial System

Rym Ayadi ()
Additional contact information
Rym Ayadi: City University of London

Chapter Chapter 2 in Banking Business Models, 2019, pp 5-20 from Palgrave Macmillan

Abstract: Abstract Several decades prior to the Great Financial Crisis (GFC), the structural features of banking and finance evolved, producing major changes on how banks and other financial institutions operate in the financial system domestically and worldwide. The traditional role of banks in the economy evolved from the traditional intermediation approach to a one-stop shop approach, in which banks offer a wide range of financial services, enhanced by a widespread wave of financial innovations. Banks and financial markets became more closely linked and integrated. More recently, financial technology (the so-called Fintech) has created further disruptive forces and new risks in the financial industry that are yet to be explored in the upcoming decades. This chapter exposes the evolving traditional role of banks, which embraced the “financialisation” trend, leading to a fundamental transformation of their original business models. Is also provides a literature review on the explanatory factors of this process of transformation, in particular the reasons why banks chose to diversify their activities and funding strategies.

Keywords: Great Financial Crisis; Bank business models; Financial stability; Banking regulation; Banking resolution; Banking economics; Diversification; Financial transformation; Wholesale funding; Systemic risk; Derivatives; Too big to fail (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-030-02248-8_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9783030022488

DOI: 10.1007/978-3-030-02248-8_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().