A view of the collapse of investment banking business model in global financial crisis

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Other Title
  • 金融危機における投資銀行のビジネスモデルの崩壊に関する一考察
  • キンユウ キキ ニ オケル トウシ ギンコウ ノ ビジネス モデル ノ ホウカイ ニ カンスル イチ コウサツ

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Investment banks have played an important role in the capital market, especially, the direct finance developed at present. Raising capital for corporations, providing advice on transactions such as mergers and acquisitions, as well as trading securities are the main businesses of invest¬ment banks. Because the financial engineering developed, investment banks have continuously created securitized products such as Residential Mortgage-Backed Security (RMBS) and Collateralized Debt Obligation (CDO) since 2000. The scale of securitized products climbed to $520 billion and reached the peak at the end of 2006. Investment banks and other financial institutions got huge profits from the capital market. But, the price of securitized products such as CDOs have plum¬meted to the ground when the subprime mortgage crisis happened, so hedge funds, mutual funds and investment banks have suffered huge losses in the global financial crisis. Even if the fourth biggest investment bank Lehman Brothers had to file for bankruptcy protection on September 15, 2008. This paper will analyze the business model of investment banks, and examine whether an excessively expanded business of investment banks connect with this financial crisis.

Journal

  • Regional studies

    Regional studies 37 (2), 37-50, 2010-02-28

    鹿児島国際大学附置地域総合研究所

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