Indirect Finance is Still the Dominant Pattern of Financial Activities--A New Theoretical Framework

Numerous economic studies have taken pains to prove that the expansion of global financial markets has meant the rise of direct finance and the decline of indirect finance.This paper proposes an opposite viewpoint,that in recent decades the global finance industry has seen a tendency of the increasing dominance of indirect finance.This paper proposes (1) the idea to classify all financial activities into market financeandnon-market finance,depending on whether they are carried out in the forms of negotiable financial instruments or not;(2)a new theoretical framework in which to analyze different patterns of all financial activities,namely,market indirect finance,market direct finance non-market indirect finance and non-market direct finance.This new theoretical framework can help to clarify current confusion that is abundant in the field of financial theories.