Long-Term Trends in Intra-Financial Sector Lending in the United States (1950–2012)
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This paper examines the evolution of intra-financial sector lending in the United States, 1950–2012, constructing estimates from the Federal Reserve’s Flow of Funds Accounts. Lending between financial institutions has grown nearly five-fold since the 1950s and currently accounts for roughly half of all financial sector lending. In the run up to the financial crisis of 2007–2008, the growth of intra-financial lending was concentrated in assets highly implicated in the genesis of the crisis, suggesting that this growth may have contributed to the crisis. This growth in intra-financial lending also raises questions about the contribution of the financial sector to the real economy.
Keywordsfinance intra-financial lending financial crisis
KeywordsG01 G10 G20
The authors thank the Institute for New Economic Thinking (INET) for financial support and participants in workshops at the University of Massachusetts, Amherst and the New School for Social Research for helpful comments.
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