While these changes in the financial landscape have been termed ‘disintermediation’ because they involve moving away from traditional bank-centred ties, the term is a misnomer. Although in a number of industrialized countries, individuals don’t deposit a significant portion of their savings directly in banks any more, they invest indirectly in the market via mutual funds, insurance companies, and pension funds, and in firms via venture capital funds, hedge funds, and other forms of private equity. The managers of these financial institutions, whom I shall call ‘investment managers’, have
...more
