Figure 1: Composition of the U.S. financial system over time.
The chart shows the composition of the U.S. financial system over time, defined as the share of assets held by different types of financial intermediaries. The vertical axis ranges from 0 to 100%, while the horizontal axis spans 1952 to 2022. The share of bank-held assets declined steadily between the late 1970s and the late-1990s, from about 40% to about 20% of the total. This drop coincided with sustained growth in mortgage-backed securities issued by government-sponsored enterprises and in pooled investment vehicles, such as mutual funds and exchange-traded funds. Over time, the share of defined-benefit pension funds declined in favor of defined-contribution funds, while the footprint of insurance companies contracted slightly. The overall shift toward marketable securities raised the need for liquidity supply, which dealers met by expanding their balance sheets.
The chart shows the share of financial assets held by various types of intermediaries. The data are from the Financial Accounts of the United States. The sample covers 1952 to 2022. For defined-benefit pension funds, the chart shows total financial assets minus claims on sponsors (unfunded pension entitlements). The acronyms shown in the legend stand for: real-estate investment trusts (REITs), asset-backed securities (ABS), government-sponsored enterprises (GSEs), agency pools (Ag. Pools), defined-contribution and defined-benefit pension funds (DC and DB pensions), exchange-traded funds (ETFs), mutual funds (MFs), closed-end funds (CEFs), and money-market mutual funds (MMFs).
Figure 2: Financial assets held by large non-financial corporations.
The chart shows the financial assets held by large private non-financial firms, expressed in trillion dollars (left vertical axis). The horizontal axis covers the period from 2000 to 2021. Since 2000, these firms increased their holdings of financial assets from less than 0.5 trillion to more than 1.5 trillion. The chart also shows the share of corporate bonds held by large private non-financial firms, as a share of their total financial assets. The share rose from about 10% in 2000 to nearly 25% in 2018, before falling below 20% (right vertical axis).
The shaded area shows financial assets held by a selection of large U.S. non-financial corporations, as defined by Darmouni and Mota (2023). The red line represents the share of financial assets invested in corporate bonds. The sample covers 2000 to 2021.
Figure 3: The asset mix of select types of U.S. financial intermediaries.
The chart shows the mix of assets held by three types of financial intermediaries, expressed as a share that each asset class represents of these intermediaries’ balance sheets. The chart comprises three panels, which refer to life insurance companies (top), defined-benefit pension funds (middle) and defined-contribution pension funds (bottom). In each panel, the vertical axis ranges from 0 to 100%, and the horizontal axis covers the period from 1952 to 2022. For life insurance companies, corporate bonds represent the largest asset class. Furthermore, their investments in mutual funds, which have risen sharply since the 1980s, also include corporate-bond funds. Turning to pension funds, defined-benefit funds hold mostly equities, although the share of corporate bonds has increased since the 2008 financial crisis. As for defined-contribution funds, most assets consist of mutual funds, which have progressively crowded out direct holdings of equities and especially of corporate bonds.
The three charts report the composition of the balance sheets of three types of U.S. financial intermediaries: life insurers (top), defined-benefit (DB) pension funds (middle) and defined-contribution (DC) pension funds (bottom). MMFs and CP stands for money-market mutual funds and commercial paper, respectively. The data are from the Financial Accounts of the United States. The sample covers 1952 to 2022.