A STUDY ON THE ROLE OF TECHNOLOGY IN INVESTMENT BANKING

Published 28 Feb 2019 •  vol 123  • 


Authors:

 

Donovan A. McFarlane, School of Business, Charisma University, Turks and Caicos Islands
Francis Pol Lim, AMA University, Philippines

Abstract:

 

This paper examines the role of technology in investment banking (IB). The authors introduce the investment banking industry as a highly complex mechanism that is dependent on technology and which must balance financial goals with ethical and legal compliance. The authors define investment banking, and then presents a brief history of investment banking from the 1890s to present. The authors examine the impact of the 2007-2008 Financial Crisis on the investment banking industry and then explore the many functions of investment banks under five major categories: (1) raising capital and providing security underwriting, (2) facilitating mergers and acquisitions, (3) engaging sales and trading and conducting equity research, (4) offering retail and commercial banking, and (5) providing back office and front office functions. The authors describe the indispensable and overwhelming role of technology in investment banking by identifying front office, middle office, and back office IB functions that depend on and require technology. Finally, ethics in investment banking is explored and the authors make several recommendations for effectively leveraging technology in investment banking.

Keywords:

 

Initial Public Offering (IPO), Investment Banking, Investment Banking (IB) Industry, Glass-Steagall Act of 1933, Gramm-Leach-Bliley Act (GLBA), Merger and Acquisition (M&A)

References:

 

[1] Chowdhry, H. (2017). What is Investment Banking? Wall Street Prep. Retrieved September 23, 2017, from https://www.wallstreetprep.com/knowledge/about-investment-banking/
[2] Dama, Y. “Role of Technology in Investment Banking”, Imarticus Blog, September 28, 2012. Retrieved September 23, 2017, from http://imarticus.org/role-of-technology-in-investment-banking
[3] Ellis, K., Michaely, R., & O’Hara, M. “Competition in investment banking”, Review of Development Finance, 1.1 (2010): 28-46.
[4] Investopedia “Investment banking”, Retrieved September 24, 2017, from http://www.investopedia.com/terms/i/investment-banking.asp.
[5] Reynolds, J.N., & Newell, E. Ethics in Investment Banking. New York, NY: Palgrave Macmillan, St. Martin’s Press, (2011).
[6] Solnik, B. & McLeavey, D. Global investments, 6th Edition. Upper Saddle River, NJ: Pearson Higher Education, (2014).
[7] The Economic Times. Definition of ‘Investment Banking’. The Economic Times. (2017). Retrieved September 23, 2017, from http://economictimes.indiatimes.com/definition/investment-banking.

Citations:

 

APA:
McFarlane, D. A., & Lim, F. P. (2019). A Study on the Role of Technology in Investment Banking. International Journal of Advanced Science and Technology (IJAST), ISSN: 2005-4238(Print); 2207-6360 (Online), NADIA, 123, 31-40. doi: 10.33832/ijast.2019.123.04.

MLA:
McFarlane, Donovan A. et al. “A Study on the Role of Technology in Investment Banking”. International Journal of Advanced Science and Technology, ISSN: 2005-4238(Print); 2207-6360 (Online), NADIA, vol. 123, 2019, pp. 31-40. IJAST, http://article.nadiapub.com/IJAST/Vol123/4.html.

IEEE:
[1] D. A. McFarlane and F. P. Lim, “A Study on the Role of Technology in Investment Banking.” International Journal of Advanced Science and Technology (IJAST), ISSN: 2005-4238(Print); 2207-6360 (Online), NADIA, vol. 123, pp. 31-40, Feb. 2019.