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Disintermediation

• It means by-passing the banks. It refers to corporations borrowing directly from institutions or individuals. Disintermediation occurs when corporations issue bonds or commercial paper instead of taking a bank loan. Similarly, individual savers can disintermediate by putting money in mutual funds directly instead of using checking and savings accounts at the banks.

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

 
 

Follow this link for all the terms related to term.

 
 Embedded terms in definition
 Commercial paper
Commercial
Financial institution
Issue
Mutual funds
Mutual fund
Order
Paper
 
 Referenced Terms
 Intermediation: Investment through a financial institution. Related: Disintermediation.

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