Investment banks are the main service providers in the financial market.
Investment banking refers to financial service institutions other than traditional commercial banks. The difference between commercial banks is that risks are not isolated. In the past two decades, under the trend of international economic globalization and increasingly fierce market competition, investment banking has completely jumped off. The narrow business framework of traditional securities underwriting and securities brokerage is among the internationalization, diversification, specialization and centralization of financial business, and strives to open up various market spaces. These changes have constantly changed the investment banking and investment banking industries, and have had a profound impact on the world economy and financial system, and have formed a distinct and powerful development trend.
Diversification trend
Since the 1960s and 1970s, Western developed countries have gradually relaxed financial regulation, allowing different financial institutions to properly cross their business, creating conditions for the diversified development of investment banking. In the 1980s, with the increasingly fierce market competition and the continuous development and improvement of financial innovation tools, this trend was further strengthened. Nowadays, investment banks have completely jumped out of the narrow business framework of traditional securities underwriting and securities brokerage, forming securities underwriting and brokerage, private placement, mergers and acquisitions, project financing, corporate finance, fund management, investment consulting, asset securitization, venture capital. And other diversified business structures.
International trend
There are profound reasons for the globalization of investment banking. First, the speed of economic development in various countries and the speed of development of the securities market are different, which makes investment banks use this as a new competitive field and profit growth point. This is the investment bank. The inherent requirements of external expansion. Second, the improvement of the international financial environment and financial conditions objectively prepares the conditions for investment banks to achieve global operations. As early as the 1960s, investment banks used cooperation with foreign correspondent banks to help the company's companies sell securities overseas or as an investor intermediary to enter foreign markets. In the 1970s, in order to participate more effectively in the international market competition, major investment banks have established their own branches overseas. After the 1980s, with the integration of the world economy, the capital market, and the rapid development of the information and communication industry, the restrictions of the past distance can no longer be the barrier of financial institutions. Business globalization has become an investment bank in the fierce market competition. An important issue in the commanding heights of the Chinese occupation.
Specialization trend
Specialized division of labor is an inevitable requirement of socialized large-scale production. In the process of diversification of the entire financial system, the specialization of investment banking has become inevitable. Major investment banks have their own advantages in diversifying their business. For example, Merrill Lynch has a reputation for infrastructure financing and securities management, Goldman Sachs is known for its research capabilities and underwriting, Salomon Brothers is known for commercial paper issuance and corporate acquisitions, and First Boston is leading the way in organizing syndicates and arranging private placements.
Centralized trend
In the 1950s and 1960s, with the recovery and growth of the post-war economy and finance, the competition and cooperation of major consortia made financial capital more and more concentrated, and investment banks were no exception. In recent years, due to the business competition of commercial banks, insurance companies and other financial institutions, such as the distribution of income bonds, European dollar syndicates, etc., the concentration of investment banking has been further aggravated. Under this circumstance, major investment banking industries have expanded their scale through mergers, acquisitions, and listings. For example, Merrill Lynch and Whitewell's merger, Swiss Bank's acquisition of British Warburg and so on. Large-scale mergers and acquisitions have made the investment banking business highly concentrated. Among the 25 largest investment banks in the United States in 1987, the largest three, five, and ten companies accounted for 41.82% and 64.98% of the market securities, respectively. 87.96%.
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