Has the U.S. Finance Industry Become Less Efficient?
28 Pages Posted: 15 Dec 2011
Date Written: December 2011
Abstract
I use the neoclassical growth model to study financial intermediation in the U.S. over the past 140 years. I measure the cost of intermediation on the one hand, and the production of assets and liquidity services on the other. Surprisingly, the model suggests that the finance industry has become less efficient: the unit cost of intermediation is higher today than it was a century ago. Improvements in information technology seem to have been cancelled out by increases in trading activities whose social value is difficult to assess.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Wages and Human Capital in the U.S. Financial Industry: 1909-2006
By Thomas Philippon and Ariell Reshef
-
Wages and Human Capital in the U.S. Financial Industry: 1909-2006
By Thomas Philippon and Ariell Reshef
-
Skill Biased Financial Development: Education, Wages and Occupations in the U.S. Financial Sector
By Thomas Philippon and Ariell Reshef
-
Skill Biased Financial Development: Education, Wages and Occupations in the U.S. Financial Sector
By Thomas Philippon and Ariell Reshef
-
Financiers vs. Engineers: Should the Financial Sector Be Taxed or Subsidized?
-
Financiers Vs. Engineers:Should the Financial Sector Be Taxed or Subsidized?
-
Financiers Vs. Engineers: Should the Financial Sector Be Taxed or Subsidized?
-
The Division of Labour, Coordination, and the Demand for Information Processing
By Guy Michaels
-
Why Has the U.S. Financial Sector Grown so Much? The Role of Corporate Finance
-
Product Markets and Paychecks: Deregulation's Effect on the Compensation Structure in Banking