Hedged.Biz

  • Disclaimer
  • About Us
  • Articles
  • Home
  • Articles
  • Finance. A Misallocation of Resources?
March 8, 2026

Finance. A Misallocation of Resources?

Finance. A Misallocation of Resources?

by Burnham Banks / Monday, 18 June 2018 | 8:32 am / Published in Articles
image_pdfimage_print

Hard data is scarce and noisy but according to estimates by the World Bank and OECD, the financial sector accounts for 20-30% of GDP in developed countries. The IMF estimates that total global nominal GDP is some 77.6 trillion dollars of which financial services account for 13.1 trillion dollars or 16%.

What services does the financial sector provide? Mainly they provide banking services, insurance and wealth management. In some way, shape or form, the financial sector’s function is to act as an intermediary between savings and investment. Seen this way, finance is an enabler, an infrastructure. One wonders if it is an efficient allocation of human and capital resources that 20% of global output is dedicated to finance.

How would you see it if the transaction costs of using your credit card was 20%?

Ten Seconds Into The Future

“Hello. I’m Burnham Banks and I studied economics in the late 80s and early 90s. I’m still studying economics today and am still no wiser. This blog is a journal, a record of my thoughts and experiences. If we are destined to repeat our mistakes, we should at least repeat them faithfully. If not, then perhaps the past is a mischievous guide and we should try something new.”

Meta

  • Entries RSS

Featured Posts

  • Hiring and Managing Investment Teams

  • Semi Liquid and Evergreen Funds

  • Towards a theory for impact capital

  • Market Outlook 2026

  • Ten Seconds Into The Future 2026

  • Purpose

  • AI, Entropy, and the Order of Knowledge

  • Impact Investing and Family Offices

  • How did we get here? Where do we go from here?

  • A Hundred Years of Capitalism: Fragile Prosperity

  • Free Markets, Capitalism and Inequality

  • Purpose

  • Why We Have Finite Lifespans

  • Ten Seconds Into The Future 2025 06

  • Long short, hedging and market neutrality under unruly markets

  • Ten Seconds Never Felt So Long. 2025 Trade War.

  • Tariff Wars. The Best Response to Tariffs is to Cut One’s Own.

  • 2025 Geo Macro Scenario A

  • Fiction. Foundation CG. 2025 02

  • Thoughts from the Bar Stool. 2025 02

  • Trump. Vichy. Lebensraum.

  • FICTION. Ten Seconds Into The Future 2025

  • A Few Thoughts about AI

  • Ten Seconds into 2025. This is Thin…

  • Efficiency X Robustness and Other Tradeoffs

Categories

  • Articles

Archives

  • RSS FEED

Copyright 2018 © Hedged.Biz All rights reserved

TOP