Disintermediation

disintermediation investment & finance definition
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The removal of a middleman from a transaction.

Definition
Disintermediation
The movement of funds from one investment vehicle to another; for example the withdrawal of funds from depository institutions for the purpose of investing the same funds in money market instruments.

Disintermediation Term used originally to describes the process whereby customers did not include the often-used intermediary, the bank to complete a transaction.

Disintermediation
The movement of funds from low-yielding accounts like savings accounts into higher yielding investments like debt securities.
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Disintermediation: The placement of funds directly into securities rather than into a bank or thrift (which acts as an intermediary).

Disintermediation
Withdrawal of funds from a financial institution in order to invest them directly.

Disintermediation: The nonuse of financial institutions as intermediaries between savers and the users of funds.

Good news: This is a logical next step in disintermediation. The cash flows are relatively predictable, in contrast to cash flows on "catastrophe bonds" (q.v.).

One feature of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations.

disintermediation The extraction of an intermediary, or middleman, from a transaction or communication.... disinvestment A decrease in capital investment. dismal science This is a nickname for the field of economics.

See also: Intermediation, Investment, Share, Market, Close