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Chicago Fed Letter, No. 41, January 1991
Disintermediation Marches On

Historically, bank disintermediation has occurred whenever bank borrowers or savers could get a better deal from nonbank alternatives. Today, bank disintermediation is being driven by increasing deposit insurance premiums, the high cost of raising bank capital, and—in a few instances—an inability to raise capital. As a response to these pressures, banks are initiating disintermediation, shrinking both to control risk and to remain in compliance with regulatory requirements.



Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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