The emergence of the new economy, and its challenge to financial intermediation and banking: A survey

Technological progress and knowledge-based innovations have more important role in economic growth and development than ever. This conjecture is often called the new economy, referring to economic growth that is strongly associated to the development of information and communication technology. In order to understand this ongoing process it is important to separate short and long term as well as micro- and macroeconomic aspects of the new economy. Financial intermediation and banking are under constant structural change due to new technologies and deregulation. Despite that, the basic functions of banks do not change. However, in the changing environment banks have to manage the potential threat of disintermediation, i.e., structural change from indirect to direct finance. As an example of the new challenges, banks are forced to create an online strategy in order to survive the everincreasing global competition.