What term describes the process of money flowing out of banks?

The process of money flowing out of banks is referred to as disintermediation. This term specifically describes a situation where depositors withdraw their money from traditional banking institutions and invest it elsewhere, such as in the stock market or other financial instruments that may offer higher returns. Disintermediation can occur for various reasons, including shifts in interest rates or changes in consumer preferences regarding investment opportunities.

In contrast, other terms like deposition or regulation do not accurately capture this process. Depositation typically refers to the act of placing funds into an account, while regulation pertains to the rules governing financial institutions and their operations, which does not directly relate to the outflow of funds. Intermediation involves banks acting as intermediaries between savers and borrowers, fundamentally differing from the outflow of money characteristic of disintermediation.