Investment Banking
Candlefocus EditorInvestment banks can act as both advisors and facilitators when it comes to new debt or equity securities. They work with both buyers and sellers to find willing investors, underwrite securities, and make sure the stakeholders' interests are protected. They also provide assistance to guide companies through the process of evaluating potential new business mergers and acquisitions, as well as implementing reorganizational strategies.
For institutional investors, investment banks can assist in setting up pension funds or pooling money to create new investments or options. They also provide advice and execute trades on behalf of their clients. Private investors can benefit from the services of investment banks as well—brokers may keep them informed on market trends and advise them on the best possible strategies for their investments.
Investment banking is a specialized industry, which is why it has historically been separated from other types of commercial banking activities. The Glass-Steagall Act, which was passed in 1933, officially separated investment banking from other banking services and remained in effect until 1999. This law aimed to protect consumers from the inherent risks of investment banking.
Today, many investment banks offer a combination of services and continue to be an important part of the global financial market. Their skills and knowledge can be invaluable for companies, governments, and individuals as they seek to raise money, maintain liquidity, and maximize return on investment.