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DISINTERMEDIATION REVISITED
Author(s) -
Horvath Philip A.
Publication year - 1988
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1988.tb01269.x
Subject(s) - disintermediation , deregulation , financial institution , economics , business , monetary economics , finance , macroeconomics
The passage of financial institution reform legislation such as the Depository Institution Deregulation and Monetary Control Act of 1980 is thought to reduce disintermediation. This paper shows that the prevailing “mean difference” explanation for disintermediation is insufficient. Furthermore, this paper shows that two‐moment expected utility explains depositors' mixing behavior but does not fully explain disintermediation. Maximization of expected utility in the form of a power function is used to show that skewness in expectations explains the shifts from thrift deposits that characterize disintermediation.