How to define an investment bank?

In the traditional sense, investment banks are companies that help companies or governments issue new securities to raise funds. Unlike other banks, they can deposit or borrow money, and they don't always use their own money to issue securities. Their main function is to buy newly issued stocks and bonds from companies or governments, and then try to sell them to the investing public. At first, investment banks mainly operated in the primary market. In recent years, they not only set foot in the secondary market, but also gained most of their income from it. Once the new shares are sold in the primary market, the next transaction will be carried out in the secondary market. In addition, they also participate in almost all activities of the non-mainstream financial system. Bear Stearns and Lehman Brothers took the lead in this storm because they were too involved in derivative financial products and real estate mortgage bonds.

Investment bank is the title of the United States and continental Europe, in Britain it is called merchant bank, and in China, Japanese and other Asian countries it is called securities company.

There is no strict definition of investment bank in the world, and it is generally believed that there are four forms:

The first type: any financial institution engaged in Wall Street financial business can be called an investment bank;

The second type: financial institutions that only operate part or all of the capital market business are investment banks;

The third type: financial institutions engaged in securities underwriting and enterprise mergers and acquisitions are called investment banks;

Fourth, financial institutions that only underwrite securities in the primary market and trade securities in the secondary market are called investment banks.

Investment bank is a concept corresponding to commercial bank, and it is a new industry formed by modern financial industry to adapt to the development of modern economy. The distinctive features that distinguish it from other related industries are as follows: firstly, it belongs to the financial service industry, which is the symbol that distinguishes general consulting from intermediary service industry; Second, it mainly serves the capital market, which is a sign that distinguishes commercial banks; Third, it is an intelligence-intensive industry, which is different from other professional financial services institutions.

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