Disintermediation Meaning & Definition

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Definition of Disintermediation

Disintermediation is the flow of money from traditional bank accounts to alternative higher yielding investments such as stocks, bonds an other investments.

Applying "Disintermediation" to Securities Exams:

When an investor or saver withdraws money from a traditional financial intermediary such as a bank to invest those funds in higher yielding or higher returning opportunities the money is removed from the financial intermediaries and disintermediation occurs.