What is the Role of Investment Banks?

Investment banks play a central role in the financial system by providing a range of services to companies, governments, and other organizations. Some of the key roles of investment banks include:

1. Underwriting: Investment banks act as intermediaries between issuers of securities (such as companies or governments) and investors. They help issuers raise capital by underwriting and selling securities, such as stocks and bonds, to the public.

2. Mergers and acquisitions (M&A): Investment banks advise companies on M&A transactions and help them structure and execute deals.

3. Trading: Investment banks buy and sell securities on behalf of clients or for their own accounts.

4. Advisory services: Investment banks provide a range of advisory services, such as helping companies raise capital or evaluate strategic alternatives.

5. Market making: Investment banks act as market makers by maintaining an inventory of securities and facilitating the buying and selling of these securities.

By providing these and other services, investment banks play a key role in facilitating the flow of capital and supporting economic growth.