You may have noticed that banks aren’t quite what they once were. More and more of the financial system’s heavy lifting is now being done by capital markets. At least in the US.
Here’s a new NBER paper that estimates that the market share of US banks in all private lending has almost halved from 60 per cent in 1970 to 35 per cent last year; loans as a percentage of bank assets has fallen from 70 per cent to 55 per cent; and that the share of household wealth held in deposit accounts has fallen from 22 per cent to 13 per cent.
