IntroductionWith the development of the financial system and information technologies, commercial banks, formerly intermediaries between surplus and deficit economic actors, are gradually losing their traditional role. Table 1 shows that deposits in US commercial banks overall declined by more than 60% between 2006 and 2010. While with the deregulation of financial markets, companies finance or invest directly in the form of securities, and banks begin to create investment banks. , there has been much research and debate on disintermediation. Considering the responsible factors, Bennaceur and Goaied (2008) believe that the development of the stock market contributes to the profitability of commercial banks, which constitutes a considerable factor of disintermediation; Walker's article illustrates that one of the reasons is the particular balance sheet structure of commercial banks (Walker, 1993). Regarding the effects of disintermediation on the banking sector, Schmidt, Hachethal and Tyrell (1999) argue that the importance of the banking system has not been replaced by the market-based financial system; Bikker and Bos (2005) as well as Howcroft (1998) argue that disintermediation results in a transformation of banks to act as investment agencies. This article will analyze this issue on the three direct aspects of profitability, risk and liquidity at first, then the main effects of disintermediation on the banking sector will be evaluated in section II. Finally, in addition to the summary of the discussion, an evaluation of this discussion and a forecast of the future operation of banks will be presented in the conclusion. Section I - Factors Responsible for Bank Disintermediation As researchers have studied, there are many factors related to.. ... middle of paper ...... dies in Economics and Finance, 3 (1), pp. 63-75. Bank of England (2011) Statistics. Retrieved March 6, 2011 from http://www.bankofengland.co.uk/statistics/index.htm. US Federal Reserve (2011) Assets and liabilities of commercial banks in the United States – H.8. Retrieved 26 March 2011 from http://www.federalreserve.gov/releases/h8/current/default.htm.Lloyds TSB (2011) Two-year fixed rate cash ISA. Retrieved March 15, 2011 from http://www.lloydstsb.com/savings/fixed_rate_cash_isa.asp.NatWest (2011) Fixed rate ISA. Retrieved March 15, 2011 from http://www.natwest.com/personal/savings/g2/isas/fixed-rate.ashx#tabs=section1.Santander (2011) ISA – Savings. Retrieved March 15, 2011 from http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&canal=CABBEYCOM&cid=1210607970481&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateY.2.