Investment banking is a particular form of banking which finances capital requirements of an enterprises. Investment banking assists as it performs IPOs, private placement and bond offerings, acts as broker and carries through mergers and acquisitions.
Functions of Investment Banking:
Investment banks have multilateral functions to perform. Some of the most important functions of investment banking can be jot down as follows:
Investment banking help public and private corporations in issuing securities in the primary market, guarantee by standby underwriting or best efforts selling and foreign exchange management . Other services include acting as intermediaries in trading for clients.
Investment banking provides financial advice to investors and serves them by assisting in purchasing securities, managing financial assets and trading securities.
Investment banking differ from commercial banking in the sense that they don't accept deposits and grant retail loans. However the dividing line between the two fraternal twins have become flimsy with loans and securities becoming almost substitutable ways of raising funds.
Small firms providing services of investment banking are called boutiques. These mainly specialize in bond trading, advising for mergers and acquisitions, providing technical analysis or program trading.
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