FINANCIAL MARKETSby DollarBillionaire™
High-Performance Individuals understand Financial Markets and the various types of Financial Markets that exist. Here we define what a Financial Market is and give a broad overview of how these markets operate.
In this Teaching Document, you will find the DollarBillionaire ™ Guidance Notes on Financial Markets.
Written by Barron Hall. Revised and Updated Friday 23 August 2019.
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FINANCIAL MARKET DEFINITION
Merchant Banking is a bank that provides Underwriting, Loan Services, Fundraising Services, Business Advisory Service and International Financing for small to medium-sized multinational corporate clients and high net-worth individuals who operate in many countries. Merchant Banks invest directly in the equity of businesses rather than supplying loans. These banks specialize in International Trade. They do not deal directly with the public and they do not provide deposit regular banking services like savings and checking accounts.
What is a “Financial Market”
Merchant Banks deal with businesses, governments, private and public companies, private equity firms, and other institutions. These banks are very similar to Investment banks, however, they provide services tailored more to Multinational Clients and high net worth individuals who operate in many countries. Merchant Banks normally deal with firms that may not be big enough to use the services of an Investment Bank offering an IPO. These merchant banks might help the firm through a private placement of securities, with less regulatory requirements. These securities would be sold to sophisticated investors. Merchant Banks do not deal directly with the public as commercial banks do, nor do they provide regular banking services like deposit-taking and savings accounts. They render their services for a fee.
In Britain, a Merchant Bank is the same as an Investment Bank. In the USA, this is not the case. In the USA a Merchant Bank is a bank that provides capital to a business in the form of share ownership instead of a loan. Merchant Banks also specialize in international operations, dealing with clients that operate in multiple countries.
Merchant Banks got their name “Merchant Banks” from the fact that they were originally created to facilitate and fund production and trade of commodities.
The Role of Financial Markets
Merchant banks provide many services to their multinational clients, including underwriting, share issue management, venture capital financing, leasing, acceptance credit and bill discounting, loans including loan syndication, equity financing, bridging finance, credit syndication, portfolio management, international fundraising, foreign corporate investing, financial and corporate advising, project counseling, foreign real estate transactions, trade finance, foreign investments, and other international transactions.
Top Merchant banks include JPMorgan Chase, Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, and Citibank.
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