The Global Financial Crisis and The Regulation of Investment Banks

1154 Words Jun 18th, 2018 5 Pages
Lessons of GFC for the regulation of Investment Bank
Investment Banks enable individuals, institutions such companies, governments to raise capital by offering underwriting services or working as an agents of the client in offering securities or in both roles. Investments banks play a very important role in stimulating investments in the United States both from individuals and corporate.
The global financial environment has over the last decade experienced enough changes as can be witnessed from the key economic indicators. These changes have significantly impacted various stakeholders such as financial markets, money markets, capital markets and the general micro and macro economics players. Countries have been hit by recession and
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The investment banks changed some of the products that they were offering to the market especially those which were considered highly risky. These are the products which were blamed as have led to increased speculations among the consumers. For example some of the derivative products that were in the market prior to the financial crisis have since been discontinued because they were highly risky and that over exposed the banks to higher level of risk.

Lessons of Global financial Crisis for the financial products created by investment Banks.
As mentioned above, some of the products that were being offered by the investments banks prior to the global financial crisis overexposed them to financial risks such liquidity risk. For an investment banks to be successful, they need to always predict the financial patterns and opportunities and then put in position resources so that they use these opportunities in the best possible ways. Following the global financial crisis and other challenges that have affected the financial sector, investment banks have employed revenue diversification trend. Traditionally, investment banks used to offer their customers variety of services such as retail and investment fund management, money lending, securities services and structured finances. Currently, investment banks have changed their business focus and do

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