Why banks are no longer the main lenders
Once upon a time, banking was simple: take deposits, lend at a margin, and finish the day on the golf course by 3pm. But that world has been fading for decades.
Since the 1960s, the share of direct loans sitting on banks’ balance sheets has steadily declined. Even as banks have grown larger relative to GDP, their role in actual credit provision has flatlined — displaced by bond markets, fintech lenders, securitization, and private credit funds.
Today, banks are less about lending directly, and more about channeling capital through markets. The shift reshapes not just banking, but the very structure of modern finance.
Source: https://www.economist.com/finance-and-economics/2025/07/31/the-deeper-reason-for-bankings-retreat
