Investment banking - linkages to the real economy and the financial system

Quarterly Bulletin 2015 Q1 article
Published on 09 March 2015

By Kushal Balluck of the Bank’s Banking and Insurance Analysis Division.

Investment banks play a key role in capital markets and contribute to the efficient functioning of financial markets. As demonstrated in the recent financial crisis, however, investment banks can create and propagate risks in the financial system given their scale, as well as the interconnected and complex nature of their activities. Recognising investment banks’ systemic importance, a number of international regulatory initiatives have come into force since the onset of the recent financial crisis.

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