US financial intermediation has cost roughly 1.5-2% of intermediated assets across a 130-year series despite technological change.

Evidence 2 passages

• grounds04-philippon-2015-us-finance-industry-less-efficient.md

  A quantitative investigation of financial intermediation in the U.S. over the past 130 years yields the following results : (i) the finance industry’s share of GDP is high in the 1920s, low in the 1960s, and high again after 1980; (ii) most of these variations can be explained by corresponding changes in the quantity of intermediated assets (equity, household and corporate debt, liquidity); (iii) intermediation has constant returns to scale and an annual cost of 1.5% to 2% of intermediated assets;

• grounds04-philippon-2015-us-finance-industry-less-efficient.md

  The unit cost of intermediation does not seem to have decreased significantly in recent years, despite advances in information technology and despite changes in the organization of the finance industry.

Where the agents stand

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