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The Evolution of Financial Services in the United States

Author

Listed:
  • Robin Greenwood

    (Harvard Business School, Boston, Massachusetts, USA
    National Bureau of Economic Research, Cambridge, Massachusetts, USA)

  • Robert Ialenti

    (Analysis Group, Montréal, Quebec, Canada)

  • David Scharfstein

    (Harvard Business School, Boston, Massachusetts, USA
    National Bureau of Economic Research, Cambridge, Massachusetts, USA)

Abstract

This article surveys the literature on the historical growth and transformation of the US financial sector. The sector expanded rapidly between 1980 and 2006, during which its contribution to GDP rose from 4.8% to 7.6%. After the global financial crisis, the size of the sector stabilized at approximately 7% of GDP. After reviewing this literature, we examine recent developments, including the continued growth of high-fee alternative asset management and the shift away from banks to lending by nonbank financial intermediaries. We interpret both the growth and recent evolution of the sector as reflecting a continued transition to a more market-based financial system, with risk migrating away from banks and into markets.

Suggested Citation

  • Robin Greenwood & Robert Ialenti & David Scharfstein, 2025. "The Evolution of Financial Services in the United States," Annual Review of Financial Economics, Annual Reviews, vol. 17(1), pages 189-206, November.
    • Handle: RePEc:anr:refeco:v:17:y:2025:p:189-206
    DOI: 10.1146/annurev-financial-082123-105625
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    Keywords

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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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