This paper looks at the industrial organization of the investment banking industry. Longterm relationships between business firms and investment banks are pervasive in developed security markets. A vast literature argues that better monitoring and information result from relationships. Thus, security markets should allocate resources better when an investment banking industry exists. We study n...

We provide direct evidence regarding the risk and reputational capital implications of commercial bank securities underwriting activities. Using a large sample of commercial bank underwritten initial public offerings (IPOs) and comparisons with investment bank underwritten issues, we find that (1) commercial banks are no more likely to misprice IPOs than are traditional investment banks, and (2...

In this paper, we analyze the impact of banks’ non-interest income share on risk in the German banking sector for the period between 2002 and 2010. Using linear and quantile regression estimators, we find that the impact of non-interest income on risk significantly differs depending on banks’ overall business model. More specifically, we show banks with retail-oriented business model such as sa...

The East Asian ®nancial crisis had a major impact on the regional operations of banks, and in particular investment banks. As the ®nancial crisis deepened during 1997 and 1998, numerous European and North American banks began to restructure their organizational capabilities in capital markets, foreign exchange, securities, and project ®nance, as they became exposed to bad debts and reductions i...

Competition between investment banks for lead underwriter mandates in IPOs is fierce, but having committed to a particular bank, the power of the issuer is greatly reduced. Although information revelation theories justify giving the underwriters influence over pricing and allocation, this creates the potential for conflicts of interest. In this clinical paper we analyse an interesting innovatio...

We investigate how private information and monitoring affects both the sensitivity of investment to internally generated cash flows and the role of accounting quality in reducing this sensitivity. We expect financing frictions to be lower when debt is obtained from banks with private information and when banks place direct restrictions on investments. We also argue that access to private inform...

This is the first comprehensive experimental study about investigation the impacts of information technology on efficiency of Iran’s banks for a period of 22 years from (1990 to 2011) by using SFA model. Results of the study have shown the technical efficiency average of Iranian banks during the study is (79%) and technical efficiency of privatelyowned banks in Iran is higher than publicly-owne...

The main objectives of this paper are to measure the technical efficiency levels of Iranian banks and to investigate the degree of factors influence on the efficiency in these banks. Stochastic frontier analysis (SFA) methods are applied to bank-level data over 22 years (from 1995 to 2011). We find that publicly-owned banks obtain average technical efficiencies of 0.73, which is lower than priv...

We present a model in which banks trade toxic assets to raise funds for investment. The toxic assets generate an adverse selection problem and, as a consequence, the interbank asset market provides insufficient liquidity to finance investment. Investment is inefficiently low because acquiring funding requires banks to sell high-quality assets for less than their " fair " value. We analyze wheth...