Competitive Structure of Merchant Banking Industry in Bangladesh
Chapter – 1
Introduction
1.1 Rationale of the Study
Investment Banking is an American synonym of merchant banking. Investment banks provide advice on mergers and acquisitions and are involved in financing industrial corporations through buying shares and selling them in relatively small lots to investors. In the Bangladesh context, merchant banking includes all institutions that combine the functions of both development banking and investment banking.
Investment banks act as intermediaries between issuers and investors. The issuer sells securities to investment bankers who in turn sell the securities to investors. The investment banks own the securities until they are resold. For firms seeking to raise long-term funds, investment banks provide assistance through a number of functions including underwriting, marketing of securities, corporate finance, sale and brokerage, asset management and research. In underwriting, investment banks can protect themselves by forming a syndicate, which allows them to diversify the risk. One investment bank acts as the managing underwriter that oversees the underwriting activities of all members of the syndicate. In the process of marketing, securities are typically sold through a selling group consisting of the sales division of the underwriting syndicate and selected retail brokerage houses. Another significant development in investment banking is the 'unsyndicated stock offering', in which, the corporation distributes the entire stock issue directly to institutional investors rather than syndicating them through a retail distribution network to individual investors. In Bangladesh, Merchant Banks should perform all functions of Investment Bank and gain efficiency in primary market making process.
1.2 Objective (s)
Primary objective of this report is to submit this report as course requirement.
Secondary objectives of this report are:
To know the competitive structure of Merchant Banking Industry in
Introduction
1.1 Rationale of the Study
Investment Banking is an American synonym of merchant banking. Investment banks provide advice on mergers and acquisitions and are involved in financing industrial corporations through buying shares and selling them in relatively small lots to investors. In the Bangladesh context, merchant banking includes all institutions that combine the functions of both development banking and investment banking.
Investment banks act as intermediaries between issuers and investors. The issuer sells securities to investment bankers who in turn sell the securities to investors. The investment banks own the securities until they are resold. For firms seeking to raise long-term funds, investment banks provide assistance through a number of functions including underwriting, marketing of securities, corporate finance, sale and brokerage, asset management and research. In underwriting, investment banks can protect themselves by forming a syndicate, which allows them to diversify the risk. One investment bank acts as the managing underwriter that oversees the underwriting activities of all members of the syndicate. In the process of marketing, securities are typically sold through a selling group consisting of the sales division of the underwriting syndicate and selected retail brokerage houses. Another significant development in investment banking is the 'unsyndicated stock offering', in which, the corporation distributes the entire stock issue directly to institutional investors rather than syndicating them through a retail distribution network to individual investors. In Bangladesh, Merchant Banks should perform all functions of Investment Bank and gain efficiency in primary market making process.
1.2 Objective (s)
Primary objective of this report is to submit this report as course requirement.
Secondary objectives of this report are:
To know the competitive structure of Merchant Banking Industry in