Role of Investment Banking in Financial Market ?
What does an invesment bank do ?
- Raise capital for clients
- Advise corporations, states or entities on capital structure, strategy, business combinations.
- Create and sell securities to institutional and retail clients.
- Manage money for institutional and retail clients.
- Trade on proprietary basis.
Importance of investment banking
- Helps the corporations in raising capital. It facilitates the trading in securities thereby increasing the liquidity of the securities.
- It provides investment opportunities to the individual or entities.
- Most of the corporations get advisory services from the investment bank regarding the mergers, acquisitions and divestiture.
Structure of investment bankingInvestment banks are organized into 3 categories.
Front office
- Helping customers raise funds in the capital market and advise on mergers and acquisitions.
- professional management of various securities and other assets.
- Buying and selling financial products with a goal of making money on each trade.
- Creating and marketing financial products.
- researching industries, companies and products.
Middle office
- analyzing credit and market risk for banks.
- Making sure operations are complying with regulations.
- Responsible for capital management and risk monitoring.
Back office
- Making sure the bank runs smoothly by submitting trades, maintaining database and transacting required money transfer.
- The information technology department.
About Kuldeep Nikam
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