Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation
Thomas Philippon ()
No 18077, NBER Working Papers from National Bureau of Economic Research, Inc
I provide a quantitative interpretation of financial intermediation in the U.S. over the past 130 years. Measuring separately the cost of intermediation and the production of financial services, I find that: (i) the quantity of intermediation varies a lot over time; (ii) intermediation is produced under constant returns to scale; (iii) the annual cost of intermediation is around 2% of outstanding assets; (iv) adjustments for borrowers' quality are quantitatively important; and (v) the unit cost of intermediation has increased over the past 30 years.
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Published as Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-38, April.
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Journal Article: Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation (2015)
Working Paper: Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation (2014)
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