Year: 2016 | Month: October | Volume: 3 | Issue: 10 | Pages: 21-30
Should The Services Provided By Investment And Commercial Banks Be Separated? If So, Why?
Caesar K. Simpson
Swiss Management Centre (SMC) University.
One common debate dating far back the 1930s is whether universal banks should be split into commercial and investment banks, have their scope of operations narrowed, or have their scale reduced. After considering issues of financial stability, economic development, competition among financial institutions, efficiency in the provision of financial services, regulation and supervision, the writer finds that universal banking can provide considerable benefits and would pose few problems for the economy, hence should not be split. It does not follow, though, that specialised providers of financial services should not or would not also exist. Experience and logic indicate that these companies can do many things better than universal banks. In particular, specialised firms are more likely to handle many important aspect of investment banking, for example, takeovers, leverage buyouts, mergers, spin-offs and other capital structuring.
Keywords: Investment, Commercial Bank.[PDF Full Text]