Investment Banking and Security Market Development: Does Finance Follow Industry?

26 Pages Posted: 1 Feb 2006

See all articles by Bharat N. Anand

Bharat N. Anand

Harvard University - Strategy Unit

Alexander Galetovic

Universidad Adolfo Ibáñez; Stanford University - The Hoover Institution on War, Revolution and Peace; University of Padua - CRIEP

Date Written: July 2001

Abstract

Long-term relationships between business firms and investment banks are pervasive in developed security markets and there is evidence that better monitoring and information result from these relationships. Therefore, security markets should allocate resources better when an investment banking industry exists. We study the necessary conditions for the emergence of sustainable relationships and explore whether policy can foster them. We show that policy can help alleviate the costs of relationships, but an investment banking industry will not emerge with only a small number of large firms.

Keywords: relationships, size distribution of firms

JEL Classification: G20, L22

Suggested Citation

Anand, Bharat N. and Galetovic, Alexander, Investment Banking and Security Market Development: Does Finance Follow Industry? (July 2001). IMF Working Paper, Vol. , pp. 1-26, 2001. Available at SSRN: https://ssrn.com/abstract=879632

Bharat N. Anand (Contact Author)

Harvard University - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
617 495-5082 (Phone)
617 495-0355 (Fax)

Alexander Galetovic

Universidad Adolfo Ibáñez ( email )

Peñalolén
Santiago
Chile

Stanford University - The Hoover Institution on War, Revolution and Peace ( email )

Stanford, CA 94305-6010
United States

University of Padua - CRIEP ( email )

Padua
Italy

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