Difference Between Investment and Merchant Banking

Merchant banks and investment banks primarily can be defined as financial institutions that perform different services. However there are some differences between the type of activities which investment and merchant banks perform.

Investment banks facilitate mergers and acquisitions through share sales and also provide research to various companies; they also manage initial public offerings (IPOs) and also public and private share offerings. Apart from these services they also provide services like underwriting of shares and broking related services for their clients. Hence it can be said that investment bankers deal with companies which are big both in terms of size as well as capital they need for expansion.

While on the other hand merchant banks perform international financing activities such as foreign corporate investing, foreign real estate investment, mezzanine financing and trade finance. This includes services like issuing letters of credit, transferring funds internationally, trade consulting and also co-investment in international projects of the companies. As far as merchant banks are concerned their clients are mostly middle sized companies.

Hence from the above one can see that though both merchant banking and investment banking are financial institutions but they differ widely in terms of services they offer to their clients as well as in terms of their scale of operations.

1 comment… add one
  • Mayur Shirke.

    The information is helpful for me. but, I think you can add some more information and improve it.

Leave a Comment

Related pages

authorized vs issued sharesdisadvantages and advantages of mixed economydisadvantage of vertical integrationdisadvantages of rural areasmeaning of forfeitingadvantages of debit cardslaw of diminising marginal utilityurbanisation wikijournal entry for debtorsmeaning of demand in hindiasset revaluation reserve journal entriesfactoring receivables definitiondebentures in hindifactors that affect the elasticity of demandskimming in marketingslr & crradvantage and disadvantage of payback period methoddebit card advantagesaccounts receivable and unearned revenuedurable and nondurable goods examplesdifferentiate between shares and debenturesexplicity costmergers and acquisitions advantages and disadvantagesfactoring accounts receivable definitionunearned revenue adjusting entrywhat is normal and inferior goodsfluctuating capital accounttypes of dividend policieswhat is trial balance why is it preparedadvantages and disadvantages of hire purchaseadvantages of process costing systempayback period advantages and disadvantagesexamples of horizontal mergersadvantages of demat accountwhat is law of diminishing marginal utilityprepaid rent expense journal entryhow to record unearned revenuestatutory liquidity ratio in hindiadvantages and disadvantages of electronic fund transferprocess costing advantages and disadvantagesdifference between autonomous investment and induced investmentdeclining balance method of depreciation formuladifference between macro and micro economyadvantages and disadvantages of debit and credit cardsbill discountinggatt full formdisadvantages of perfect competitiondefine cosigneeadvantages of lifo methodmerits and demerits of globalisation in indian economymixed economy characteristicswhat is an autocratic leadershiphorizontal integration disadvantagesdistinguish between revenue expenditure and capital expenditureexamples of inelasticreserve accounting entriescost plus pricing advantages and disadvantagesconcept of materiality in accountingwhat are the benefits of swot analysisstock exchange advantages and disadvantagescapital account journal entryskim pricingmateriality accounting principlemateriality conceptwhat does perpetual succession meanexamples of capital budgeting projectsunearned rent revenue journal entrysocialism disadvantagesformula of profitability ratiohindi meaning of omission