Investment Banking and Security Market Development: Does Finance Follow Industry?
July 1, 2001
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Summary
Long-term relationships between business firms and investment banks are pervasive in developed security markets and there is evidence that better monitoring and information result from these relationships. Therefore, security markets should allocate resources better when an investment banking industry exists. We study the necessary conditions for the emergence of sustainable relationships and explore whether policy can foster them. We show that policy can help alleviate the costs of relationships, but an investment banking industry will not emerge with only a small number of large firms.
Subject: Banking, Business enterprises, Commercial banks, Competition, Economic sectors, Financial institutions, Financial markets, Financial services, Investment banking, Securities markets
Keywords: Business enterprises, Commercial banks, Competition, firm-commitment contract, firm-investment bank relationship, Global, high-volume firm, Investment banking, investment banking industry, low-volume firm, relationships, Securities markets, size distribution of firms, telecomm company CTC, WP
Pages:
26
Volume:
2001
DOI:
Issue:
090
Series:
Working Paper No. 2001/090
Stock No:
WPIEA0902001
ISBN:
9781451851397
ISSN:
1018-5941
