Content ITV PRO
This is Itvedant Content department
Introduction to Investment Banking
Role in Financial Markets
Learning Outcome
4
Understand advisory functions in complex decisions
3
Learn how risk is distributed in markets
2
Recognize their role in liquidity & efficiency
1
Understand how investment banks connect capital flows
Role 1: Intermediation
Connecting Capital Seekers & Providers
Investment banks act as facilitators:
Capital seekers:
Companies expanding
Governments funding infrastructure
Startups scaling
Investment bank role:
Underwriting equity/debt
Structuring securities
Regulatory compliance
Capital providers:
Mutual funds
HNIs
Retail investors
Pension funds
Key idea:Investment banks bridge funding and investment.
Role 2: Enhancing Liquidity
What is Liquidity?
Liquidity = ease of buying/selling assets without price disruption.
Result: Smooth and continuous trading.
Real insight: Well-managed IPO → active market from Day 1
Investment banks improve liquidity by:
Market making
Trading facilitation
Active price discovery
Market Efficiency
Efficient markets ensure:
Quick transactions
Optimal capital allocation
Fair pricing
Market Efficiency
Investment banks support efficiency through:
Core idea:Efficiency builds investor trust.
Market transparency
Structured offerings
Deal execution expertise
Risk Distribution
Why Risk Must Be Shared
Investment banks distribute risk using:
Securitization
Derivatives hedging
Structured financial products
Goal:No single participant bears excessive risk.
Role 3: Advisory on Complex Decisions
Investment banks guide high-stakes decisions:
Core idea:Strategic clarity reduces financial risk.
Debt restructuring
Mergers & acquisitions
Large capital raises
Summary
5
Advisory enables strategic decisions
4
Risk distribution stabilizes systems
3
Efficiency builds trust
2
Liquidity ensures smooth markets
1
Intermediation connects funding flows
Quiz
Intermediation primarily connects:
A. Buyers & sellers of goods
B. Capital seekers & investors
C. Regulators
D. Banks
Quiz-Answer
Intermediation primarily connects:
A. Buyers & sellers of goods
B. Capital seekers & investors
C. Regulators
D. Banks
Foundations of Investment Banking & its Operations- Role in Financial Markets
By Content ITV
