Postwar Changes in the American Financial Markets

The object of this essay is to gain an overview of developments in theAmerican financial markets since World War II, with particular attention to changes that have occurred either between the prewar and post-war years or within the past several decades. Inevitably such an effort must be selective. The primary emphasis here is on the interaction between the financial markets and the nonfinancial economy, in the sense of the demands that the nonfinancial economy has placed on the financial markets and the ways in which the financial markets have responded to these demands. In addition, much of this essay focuses on the evolving role of government in the financial markets and on the changes that it has brought about. Questions pertaining to the internal organization of financial markets and financial institutions, and to financial innovations per se, are also important, but they will receive less attention here.