This website uses cookies to ensure you have the best experience. Learn more

Role Of Investment Banking And Its Potential Risks To Real Economy

1679 words - 7 pages

Part B: Role of Investment Banking and its potential risks to real economyIntroductionInvestment banking is another service besides commercial banking that plays an important role in the world of finance and globalization nowadays. It provides some services such as underwriting or advisory to help company increasing funds or dealing with merger and acquisition. This part will give an overview about investment banking sector as well as its main roles in economy. Besides, this part also mentions about some risks that might happen from investment banking which need to be considered.Overview for Investment BankingExpanding of economy requires businesses and countries building more large projects and that leads to success of Investment banking industry. It's a service referring to marketing new securities to raise funds for corporations and other institutions (Hudgins, 2012). Traditionally, there was a boundary between investment banking and commercial banking. Investment banking is performed by investment bank and relates to set of activities includingUnderwriting and advisory servicesTrading and brokerageAsset management (both traditional and alternative)(Iannotta, 2010)On the other hand, commercial banking is offered by commercial bank and relates to taking deposit and retailing loans for individuals or businesses. However, in the early of 19th century, many commercial banks saw demands to find financial resources from corporations for new projects so they diversified their asset and liability activities and actively participated in sophisticated financial engineering activities (McKenzie, 2010). Banks start to acquire or form their own investment banking subsidiaries besides commercial banking such as HSBC, Citigroup or J.P Morgan Chase. They called it as Universal Banks.Role of Investment BankingTradition role of investment banking is providing underwriting service to help clients in raising funds and merger and acquisition. Besides, it also provides investing, intermediating, and risk management services to investors as well as asset management service which is responsible for managing money for individuals or corporations (Stowell, 2010)UnderwritingFirstly, one main service of investment banking is security underwriting - the purchase for new stocks, bonds, and other financial instruments in the money and capital markets on behalf of clients who need to raise new money (Hudgins, 2012). Because transactions to selling securities into the capital market are too complex and the cost is too high if clients do it by themselves, so they need to use this function of investment banking. If this sale is the first sale of common stock to general public, it's referred to as an initial public offering (IPO) (Mayo, 2005). When customers have demands to raise money for new projects, they'll contact to investment bankers (IBs). Then, process includes some main steps below.Step 1: Researching and Giving adviceIBs play as brokerage to research situation of...

Find Another Essay On Role of Investment Banking and its potential risks to real economy

Vulnerability assessment of the company system and recommendations on measures to mitigate or eliminate potential risks

1167 words - 5 pages running on MySQL3.23 back-end which is also supported by MBSA. 2.3.2 Nmap Nmap is a network security tool that detects remote devices, check open ports and their exposure to attacks, identifies firewalls and the make and models of routers. Nmap has a built-in signature algorithm that guesses the Operating System (OS) and its version based on the network (Phatak 2012). In addition, Perry (nd) indicated that Nmap a vital tool for information

Banking and the Economy Essay

1928 words - 8 pages people in today?s society have. On-screen instructions, filled with colorful graphics and pictures, explain how to select and work on various tasks. The system automatically calculates and updates account balances and keeps records of bills. A handful of banks have already set up home pages on the Internet to provide information to their existing and potential customers about upcoming services. They started their transactions.Internet banking

Potential of Discovery: The Robotic Fish and its Potential

1681 words - 7 pages more advanced in speed, stability, energy conservation, and overall navigation. But what is the real point of multiple Charlie’s some will ask. His inventor Mr. Barett says “A fully autonomous fish that "we could throw into Boston Harbor, tell to go somewhere, and have it come back,” (Leo 112) because this will finally be the fish that can map out the ocean segment by segment. Robotic exploration fish also have a great potential to take multiple

Understanding Outsourcing: A Theoretical Analysis of its Benefits and Risks to Businesses

7548 words - 30 pages attitudes towards the continuous application of outsourcing in the new century. Therefore the researcher was motivated to do an investigation into the value of this strategy in terms of benefits and risks and to identify and assess the management approaches emerged to optimise its application and implementation.2.1.2 The framework of the researchInspired by Mazzawi (2002), who proposed two types of outsourcing: traditional outsourcing and

Answers to Economy Quiz Regarding Banking and Similar Topics

2061 words - 9 pages form of public transfers, more subsidies, and reduction in taxes, reduction in the reserves and the interest rates, etc. all these will lead to increase in the money supply in the economy so that the consumption of the people can be increased. In this case the Government will increase its spending while if actually the fiscal multiplier is 1.7 then the Government will not need to increase the public expenditure as there is already a lot of

China's Latent Economic Crisis and Potential Risks

5581 words - 22 pages financial dimensions of China's economy so as to reveal its real conditions.1. Potential Risks associated with a Latent Economic Crisis1*Ms. HE Qinglian is a visiting scholar at the University of Chicago. She left China unannounced in June 2001 in the face of widespread, government-sanctioned harassment of scholars. She is the author of two books: We Are Still Watching the Stars Above (2001) and China's Pitfalls (1998). Both document the dark side of

Define economic globalization and describe its consequences to developing countries in terms of trade and investment

865 words - 3 pages Define economic globalization and describe its consequences to developing countries in terms of trade and investment. Your answer should integrate the reaction of your country to the issues of economic globalization. (about 800 words).Introduction:-Probably the most important aspects of globalization is the economical one, in this report economic globalization will be define with the discussion of the nature and the limits of economic

Risks and Potential Impact Relating to Security, Auditing and Disaster Recovery

600 words - 2 pages Introduction"Risks are the potential consequences of events or conditions that can adversely affect an organization's operations and revenues, as well as its relationships with communities, business partners, suppliers, and customers" (Erbschloe, 2003).Executive SummaryThe organization selected for this paper is a Christian bookstore that sells books, CDs, DVDs, as well as miscellaneous items. Bookstore customers include walk-in's and

Role of Investment banker

1490 words - 6 pages The Role of Investment BankersInvestment bankers play a significant role in the economic life of a country. These institutions promote investment opportunities and cause high level funds float in the market. There are more chances of economic growth to large extent. Investment bankers provide chances of earning to investors as well as general public. The dynamic competition among broker-dealers is most apparent in investment banking. Market

Gene Therapy and its Potential to Cure Deafness

1418 words - 6 pages Gene Therapy and its Potential to Cure Deafness Losing a vital sense makes living life more difficult. Gene therapy, the process of replacing faulty genes with genes genetically engineered to replace them, can potentially cure deafness. Yashimo Raphael experimented with intentionally deafened guinea pigs and the gene Atoh 1, a gene said to replace lost hair cells in the inner ear. He found that hair cells grew, but were not fully functional

Capital Markets and Investment Banking Process

1663 words - 7 pages PAGE Investment Banking PAGE 1 Capital Markets and Investment Banking ProcessAugust 7, 2006An investment is the current commitment of money or other resources in the expectation of reaping future benefits. The time committed to reading the textbooks is an investment. I may or may not benefit from the readings so I am investing my time. I could very well be wasting my time if I do not study and do well with this course. The cost of about $1500

Similar Essays

Imf And Its Role In International Political Economy

3282 words - 13 pages IMF and its Role in International Political Economy Political economy is not a new word for us because of the close relationships between politics and the economy. The development in politics is due to the development in society and the development in society is mostly driven by the economy. The parallel existence and mutual interaction of ‘state’ and ‘market

Public Investment And Its Efffect On Economy 2nd Year Economics Honours Article

788 words - 4 pages public investment booms, Bolivia, Mexico and Philippines, and two of which are known for their rapid rate of economic growth, Taiwan province of China, China and South Korea. Regarding the three countries with investment booms, the narratives suggest the following points: ? There is no evidence that rational selection of public investments according to sound economic criteria was ever seriously followed. ? Predictions about prices, costs and

Vulnerability Assessment Of The Company System And Recommendations On Measures To Mitigate Or Eliminate Potential Risks

1339 words - 6 pages 3. REPORT OF IDENTIFIED RISKS 3.1 Identification of risks in the system and/or security vulnerabilities Risks or security vulnerabilities identified in Dynamic company systems include: 3.1.1 Physical location of web servers is easily accessible by employees The company has insufficient physical controls protecting equipment as the location of web servers are easily accessible by employees. According to Landoll (2011:312) humans pose a

Vulnerability Assessment Of The Company System And Recommendations On Measures To Mitigate Or Eliminate Potential Risks

1214 words - 5 pages how they operate and the vulnerabilities or risks that they can address in the protection of passwords. Rouse (2006) refers to this step as the identification of potential threats to each resource. Run vulnerability scans Vulnerability scans can be run after understanding and mapping out company network infrastructure, applications, data flows and hardware, including security or protections needed . A security company that is well