What is investment banking? What is Investment Banking

At present, there is confusion in the understanding of the term investment bank in the academic and practical circles in China, which is largely due to the lack of clear identification of these four levels. The author believes that since the four meanings of this English phrase have corresponding Chinese words, the above four meanings should be clearly distinguished, that is, investment banking, investment banking, investment banking and investment banking science are used to represent these four meanings, rather than simply using the word investment banking.

So what exactly is an investment bank? To put it simply, an investment bank refers to a financial institution whose main business is investment banking. But it's easy for the reader to see that this is a meaningless circular definition, but it at least gives us the lesson that if we define investment banking, we define investment banking.

Generally speaking, investment banking business can be defined in four ways from broad to narrow: first, investment banking business includes all financial market business; Second, investment banking includes all capital market operations; Third, the investment banking business is limited to underwriting, trading and mergers and acquisitions; Fourth, investment banking business only refers to underwriting and trading business. The second definition that is generally accepted is that investment banking includes all capital market operations.

Therefore, investment banking can be defined as: investment banking refers to financial institutions whose main business is capital market business.

Of course, this definition is dynamic, because as the capital markets business continues to evolve, so does the connotation of investment banking. As the famous investment banker Robert ? Robert Kuhn said:

Investment banking is an organic process – constantly changing, evolving, evolving, and no book can accurately and accurately understand the above definition of investment banking Therefore, the above definition of investment banking should not be mechanically understood. At present, the capital market business (or investment banking business) mainly includes underwriting, trading, mergers and acquisitions, fund management, project financing, venture capital, credit assetization, etc.

Investment banks refer to those financial institutions that correspond to commercial banks. Investment banks mainly include non-bank financial institutions engaged in financial business such as issuance, corporate restructuring, mergers and acquisitions, venture capital, project financing, etc., and these non-bank financial institutions are also a type of financial intermediary that occupies a major position in the capital market.

1. Independent professional investment banks: There are many such professional institutions all over the world, and these professional investment banks have different business directions, such as CITIC** and CICC in China, Goldman Sachs and Morgan Stanley in the United States;

2. Investment banks controlled by commercial banks: mainly commercial banks engage in investment banking business through business means such as mergers and acquisitions of other investment banks, equity participation or establishment of subsidiaries. This form is very common in countries such as the United Kingdom and Germany, such as HSBC and UBS;

3. Universal banks directly run investment banking business: this form is mainly popular in Europe. Banks engage in investment banking business while engaging in commercial banking business, and investment banks are mainly engaged in investment business;

4. Multinational financial companies.