PROJECT ON
“AWARENESS OF INVESTMENT BANKING AMONG
PROFESSIONAL STUDENTS”
A Project Submitted to
University of in Mumbai for
The Degree of Bachelor in Commerce
(Accounting and Finance)
Under the Faculty of Commerce
By
JATIN DEEPAK BAJAJ
Roll no - 04
Under the guidance of
DR. LEENA NIAR
TOLANI COLLEGE OF COMMERCE, 150-151,
SHER-E-PUNJAB SOCIETY, GURU GOBIND SINGH ROAD,
ANDHERI (EAST), MUMBAI – 400 093.
March 2019
1
Certificate
This is to certify that Mr. Jatin Deepak Bajaj worked and duly completed his Project
Work for the degree of Bachelor in Commerce (Accounting and Finance) under the Faculty
of Commerce in the subject of Project Work and her project is entitled, “AWARENESS OF
INVESTMENT BANKING AMONG PROFESSIONAL STUDENTS” under my
supervision. I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree or Diploma of
any University.
It is his own work and facts reported by his personal findings and investigations.
_________________________________
Name and Signature of Guiding Teacher
Date of submission: _________________________
2
Declaration by learner
I the undersigned Mr. Jatin Deepak Bajaj here by, declare that the work embodied in this
project work titled “AWARENESS OF INVESTMENT BANKING AMONG
PROFESSIONAL STUDENTS”, forms my own contribution to the research work carried
out under the guidance of Dr, Leena Nair a result of my own research work and has not been
previously submitted to any other University for any other Degree / Diploma to this or any
other University.
Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.
I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.
_________________________________
Name and Signature of the learner
Certified by
_________________________________
Name and Signature of Guiding Teacher
3
Acknowledgement
To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, Dr.Vijaya Krishna for providing the necessary facilities
required for completion of this project.
I take this opportunity to thank our Coordinator, Dr. Leena Nair, for her moral support and
guidance.
I would also like to express my sincere gratitude towards my project Guide, Dr. Leena Nair
whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially My Parents and Peers who supported me throughout
my project.
4
INDEX
Chapter No.
1
2
Name
Page No.
1.0
Introduction
7
1.1
Service provided by investment bank
9
1.2
The role of the Investment Bank
10
1.3
The objectives of Investment Banking
11
1.4
Features of Investment banking
11
1.5
Commercial banking vs. Investment banking
13
1.6
History of investment banking
14
1.7
Organizational structure
16
1.8
Chartered Financial Analyst (CFA)
19
1.9
Top 10 Investment Banks in India
20
2.0
Research methodology
21
2.1
Scope of the study
22
2.2
Data Collection
22
2.3
Classification of data
22
2.4
Limitations of the study
23
2.5
Objectives of the study
23
5
2.6
Hypothesis
23
3
3.0
Review of literature
24
4
4.0
Data analysis and Interpretation
27
5
5.0
Conclusion
48
5.1
References
49
5.2
Questionnaire
50
6
Chapter -1 Introduction
Investment banking is the division of a bank or financial institution that serves governments, corporations,
and institutions by providing underwriting (capital raising) and mergers and acquisitions (M&A) advisory
services. Investment banks act as intermediaries between investors (who have money to invest) and
corporations (who require capital to grow and run their businesses). This guide will cover what investment
banking is and what bankers actually do.
Full-service investment banks offer a wide range of services that include underwriting, M&A, sales and
trading, equity research, asset management, commercial banking, and retail banking.
Investment bank is a financial institution that assists individuals, corporations, and governments in raising
capital by underlying or acting as the client's agent in the issuance of securities (or both). An investment
bank may also assist companies involved in merger and acquisition (M&A) and provide ancillary services
such as market making, trading of derivatives and equity securities, and FICC services (fixed income
instruments, currencies, and commodities).Unlike commercial banks and retail banks, investment banks do
not take deposits.
The two main functions of investment banking are known as sell side and the buy side. The "sell side"
involves trading securities for cash or for other securities (e.g. facilitating transactions, market-making), or
the promotion of securities (e.g. underwriting, research, etc.). The "buy side" involves the provision of
advice to financial institutions concerned with buying investment services such as Private equity funds,
mutual funds, life insurance companies, unit trusts, and hedge funds. An investment bank can also be split
into private and public functions with an information barrier which separates the two to prevent information
from crossing.
The private areas of the bank deal with private insider information that may not be publicly disclosed, while
the public areas such as stock analysis deal with public information.
7
Investment banking falls under two broad headings: the provision of finance advice and capital raising.
Investment banking provides services to their client for investment in capital market through shares; these
services are based on research activity. IN this, primarily the act of the purchasing and selling of shares
includes.
Investment banking organization performs role as an intermediary between investor and capital market.
Investment banking has now gained considerable position in Indian capital market.
Investment banking should reach to investors and finally faithfulness of investor for investing in banking
organization. The investment banking has the ability to draw willingness of their investors to invest more
funds for investment in capital market. The government and semi-government agencies should come in a
parallel manner to make new agenda or policies in the investment sector to improve Indian capital market.
The most common job titles (from most junior to senior) in investment banking are:
Analyst
Associate
Vice President
Director
8
1.1 Service provided by investment bankInvestment Banks provide a wide range of financial services to clients. They structure Mergers and
Acquisition deals, raise capital, analyze prospects of listed companies and offer advice, trade in securities on
behalf of clients etc.
Therefore, Investment Banking can be defined to encompass many activities such as• Intermediary between issuer and investor
• Offering brokerage services to public & institutional investors
• Provide access to equity and fixed income capital
• Underwriting and distributing new security issues
• Providing financial advice to corporate clients especially on security issues, M&A Deals
• Due Diligence
• Providing financial research to investors, corporate customers
• Providing fee-based asset management services
• Merchant Banking, Venture Capital Investing
• Providing Bridge Loans For M&A, New Financing
• Arranging & Funding Syndicated Loans
• Foreign Exchange Trading & Hedging
• Arranging Swaps, Other Risk Management Tools
Corporate Advisory Services:
• Identify promising projects
• Prepare feasibility studies - economic and financial
• Prepare in-depth project reports
• Capital structuring
• Arrange and negotiate foreign collaborations
• Give guidance on amalgamations, mergers and takeovers
Raising Capital, Syndication of loans and project finance
• Aid in applying to financial institutions, banks and other sources of finance
• Expert advice on government policies, demand-supply gaps, raw material availability, product-mix, plan
capacity utilization, requirements of plant and machinery etc
• Consultation about alternative sources of finance, debt-equity ratios, etc
Sales and trading - Depending on the needs of the clients, the main function of a large investment bank is
buying and selling products. In market making, the traders will buy and sell securities or financial products
with the goal of earning an incremental amount of money on every trade. Sales is the term that is used for
the sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading
ideas and take orders
9
1.2 The role of the Investment Bank-
Investment banks provide four primary types of services: raising capital, advising in mergers and
acquisitions, executing securities sales and trading, and performing general advisory services. Most of the
major Wall Street firms are active in each of these categories. Smaller investment banks may specialize in
two or three of these categories.
Raising Capital
An investment bank can assist a firm in raising funds to achieve a variety of objectives, such as to acquire
another company, reduce its debt load, expand existing operations, or for specific project financing. Capital
can include some combination of debt, common equity, preferred equity, and hybrid securities such as
convertible debt or debt with warrants.
Although many people associate raising capital with public stock offerings, a great deal of capital is actually
raised through private placements with institutions, specialized investment funds, and private individuals.
The investment bank will work with the client to structure the transaction to meet specific objectives while
being attractive to investors.
Mergers and Acquisitions
Investment banks often represent firms in mergers, acquisitions, and divestitures. Example projects include
the acquisition of a specific firm, the sale of a company or a subsidiary of the company, and assistance in
identifying, structuring, and executing a merger or joint venture. In each case, the investment bank should
provide a thorough analysis of the entity bought or sold, as well as a valuation range and recommended
structure.
General Advisory Services:
Advisory services include assignments such as strategic planning, business valuations, assisting in financial
restructurings, and providing an opinion as to the fairness of a proposed transaction.
10
1.3 The objectives of Investment Banking include:
• Guidance
• Project Formulations
• Implementation
• Modernization
• Diversification
• Mobilizing resources
• Raising Capital
1.4 Features of Investment banking 1. Safety of Principal:
The safety sought in investment is not absolute or complete; it rather implies protection against loss under
reasonably likely conditions or variations. It calls for careful review of economic and industry trends before
deciding types and/or timing of investments. Thus, it recognizes that errors are unavoidable for which
extensive diversification is suggested an antidote.
Adequate diversification means assortment of investment commitments in different ways. Those who are not
familiar with the aggressive-defensive approach nevertheless often carry out the theory of hedging against
inflation-deflation. Diversification may be geographical, wherever possible, because regional or local
storms, floods, droughts, etc. can cause extensive real estate damage.
2. Adequate Liquidity and Collateral Value:
An investment is a liquid asset if it can be converted into cash without delay at full market value in any
quantity. For an investment to be liquid it must be (1) reversible or (2) marketable. The different between
reversibility and marketability is that reversibility is the process whereby the transaction is reverse or
terminated while marketability involves the sale of the investment in the market for cash.
To meet emergencies, every investor must have a sound portfolio to be sure of the additional funds which
may be needed for the business opportunities. Whether money raising is to be done by sale or by borrowing
it will be easier if the portfolio contains a planned proportion of high-grade and readily salable investment.
11
3. Stability of Income:
Stability of income must be looked at in different ways just as was security of principal. An investor must
consider stability of monetary income and stability of purchasing power of income. However, emphasis
upon income stability may not always be consistent with other investment principles. If monetary income
stability is stressed, capital growth and diversification will be limited.
4. Capital Growth:
Capital appreciation has today become an important principle. Recognising the connection between
corporation and industry growth and very large capital appreciation, investors and their advisers constantly
are seeking “growth stocks”. It is exceedingly difficult to make a successful choice. The ideal “growth
stock” is the right issue in the right industry, bought at the right time.
5. Tax Benefits:
To plan an investment programme without regard to one’s status may be costly to the investor. There are
really two problems involved here, one concerned with the amount of income paid by the investment and the
other with the burden of income taxes upon that income.
When investors’ incomes are small, they are anxious to have maximum cash returns on their investments,
and are prone to take excessive risks. On the other hand, investors who are not pressed for cash income often
find that income taxes deplete certain types of investment incomes less than others, thus affecting their
choices.
6. Purchasing Power Stability:
Since an investment early always involves the commitment of current funds with the objective of receiving
greater amounts of future funds, the purchasing power of the future fund should be considered by the
investor. For maintaining purchasing power stability, investors should carefully study;
(i) The degree of price level inflation they expect,
(ii) The possibilities of gain and loss in the investment available to them
12
1.5
Commercial banking vs. Investment banking
Investment Banking is RELATIONSHIP BANKING while commercial Banking is TRANSATION
BANKING. While regulation has changed the businesses in which commercial and investment banks may
now participate, the core aspects of these different businesses remain intact. In other words, the difference
between how a typical investment bank and a typical commercial operate bank is simple: A commercial
bank takes deposits for checking and savings accounts from consumers while an investment bank does not.
Investment banks may also differ from brokerages, which in general assist in the purchase and sale of stocks,
bonds, and mutual funds. However some firms operate as both brokerages and investment banks; this
includes some of the best known financial services firms in the world.
In the strictest definition, investment banking is the raising of funds, both in debt and equity, and the
division handling in an investment bank is often called the "Investment Banking Division" (IBD).
However, only a few small firms solely provide this service. Almost all investment banks are heavily
involved in providing additional financial services for clients, such as the trading of fixed income, foreign
exchange, commodity, and equity securities.
It is therefore acceptable to refer to both the "Investment Banking Division" and other 'front office' divisions
such as "Fixed Income" as part of "investment banking," and any employee involved in either side as an
"investment banker."
Furthermore, one who engages in these activities in-house at a non-investment bank is also considered an
investment banker.
13
1.6
History of investment banking-
1896-1929
Prior to the great depression, investment banking was in its golden era, with the industry in a prolonged bull
market. JP Morgan and National City Bank were the market leaders, often stepping in to influence and
sustain the financial system. JP Morgan (the man) is personally credited with saving the country from
a calamitous panic in 1907. Excess market speculation, especially by banks using Federal Reserve loans to
bolster the markets, resulted in the market crash of 1929, sparking the great depression.
1929-1970
During the Great Depression, the nation’s banking system was in shambles, with 40% of banks either failing
or forced to merge.
The Glass-Steagall Act (or more specifically, the Bank Act of 1933) was enacted by the government with the
intent of rehabilitating the banking industry by erecting a wall between commercial banking and investment
banking.
Additionally, the government sought to provide the separation between investment bankers and brokerage
services in order to avoid the conflict of interest between the desire to win investment banking business and
duty to provide fair and objective brokerage services (i.e., to prevent the temptation by an investment bank
to knowingly peddle a client company’s overvalued securities to the investing public in order to ensure that
the client company uses the investment bank for its future underwriting and advisory needs).
The regulations against such behavior became known as the "Chinese Wall”
14
1970-1980
In light of the repeal of negotiated rates in 1975, trading commissions collapsed and trading profitability
declined. Research-focused boutiques were squeezed out and the trend of an integrated investment bank,
providing sales, trading, research, and investment banking under one roof began to take root. In the late 70’s
and early 80’s saw the rise of a number of financial products such as derivatives, high yield an structured
products, which provided lucrative returns for investment banks. Also in the late 1970s, the facilitation of
corporate mergers was being hailed as the last gold mine by investment bankers who assumed that GlassSteagall would some day collapse and lead to a securities business overrun by commercial banks.
Eventually, Glass-Steagall did crumble, but not until 1999. And the results weren’t nearly as disastrous as
once speculated.
1980-2007
In the 1980s, investment bankers had shed their stodgy image. In its place was a reputation for power and
flair, which was enhanced by a torrent of mega-deals during wildly prosperous times. The exploits of
investment bankers lived large even in the popular media, where author Tom Wolfe in “Bonfire of the
Vanities” and movie-maker Oliver Stone in “Wall Street” focused on investment banking for their social
commentary.
Finally, as the 1990s wound down, an IPO boom dominated the perception of investment bankers. In 1999,
an eye-popping 548 IPO deals were done – among the most ever in a single year -- with most going public in
the internet sector.
The enactment of the Gramm-Leach-Bliley Act (GLBA) in November 1999 effectively repealed the longstanding prohibitions on the mixing of banking with securities or insurance businesses under the GlassSteagall Act and thus permitted “broad banking.” Since the barriers that separated banking from other
financial activities had been crumbling for some time, GLBA is better viewed as ratifying, rather than
revolutionizing, the practice of banking.
15
1.7
Organizational structure
Front office: bringing in the bacon
Front office roles exist to generate revenue for the bank and make as much profit as possible for their clients.
Traders, brokers, asset managers, researchers, and sales and structuring professionals are the key players of
the front office line up.
Modern front office roles are a far cry from the incessant shouting down phones in years gone by.
Nowadays, the trading floor utilises various software packages and applications to track, analyse and predict
the markets and facilitate the trades themselves. You’ll even find developers on the trading floor!
Researchers will investigate potential markets and investment opportunities for clients to inform pitches and
asset management, whilst the traders and brokers make the trades themselves. These bankers will also
support clients as they buy, merge or sell or provide advice and services when it comes to financing and
restructuring.
Characteristics of the front office
High pressure! There are big decisions to be made in short time frames that could either make or lose
huge amounts of money.
Long working hours. 80-hour weeks are not uncommon!
These roles generally have the highest salaries in investment banking – indeed, they’re some of the most
highly paid career paths out there!
Middle office: the voice of reason
In investment banking, the middle office usually consists of risk management, research and compliance
departments, as well as some elements of technology.
Risk analysts and managers work closely with front office teams to feed them their results relating to various
asset classes and financial markets. This information helps the decision makers to mitigate investment risks
as much as possible.
16
They also manage risk in terms of compliance, ensuring the bank’s practice is on the right side of legislation
and industry standards. A legal team will also feature here.
Developers and some types of quantitative analysts work on the creation and maintenance of software and
applications used by the traders and brokers.
Financial control is also part of the middle office – it’s essentially the accounting department for the bank,
preparing financial statements for reporting to industry regulators etc.
Characteristics of the middle office
•
Huge responsibility! These guys are responsible for making sure the bank doesn’t breach regulations
and put its financial position and reputation at stake.
•
Challenging negotiations. Middle office needs to convince front office not to get carried away with
risky investment, whilst giving them the room to make the most lucrative moves they can.
Back office: the engine room
The back office is namely referred to as ‘operations’. This includes all of the services and duties that must be
carried out when trades are made by the front office: clearing and settlement. These are many administrative
roles, which play a vital part in the overall functioning of the bank – and the world of trading overall, for that
matter.
There are also opportunities to work on projects, creating new processes and refining or automating older
ones. They offer a chance to work with various different asset classes, and a global dynamic to work –
global investment banks will coordinate their operations teams worldwide.
17
It’s not just about clearing and settlement services either. A bank is, after all, a business like any other, with
staff to take care of, an image and brand to mould and promote, and a need to source the very best talent for
their roles, from graduate intake up to the most senior roles.
This is where HR and marketing comes in, running recruitment, ensuring standards are upheld across the
business, handling disciplinary issues when necessary, organising benefits and rewards for existing
employees and generally acting as the glue to keep everything in the bank together.
Technology forms part of the back office too. A modern bank is nothing without fully functioning systems
and hardware, so experts are always on hand for maintenance and to fix problems whenever they arise.
Characteristics of the back office
•
More standard office hours compared to the front office.
•
An international dynamic. Multinational investment banks often unite their operations teams across
the globe to get tasks done and problems solved as quickly as possible.
•
There are still essential deadlines to meet, though the heat of the working environment may not be as
intense as in the front office.
18
1.8 Chartered Financial Analyst (CFA)
The Chartered Financial Analyst (CFA) Program is a professional credential offered internationally by the
American-based CFA Institute (formerly the Association for Investment Management and Research, or
AIMR) to investment and financial professionals. The program covers a broad range of topics relating to
investment management, financial analysis, quantitative analysis, equities, fixed income and derivatives, and
provides a generalist knowledge of other areas of finance.
Requirements
To become a CFA charterholder, candidates must satisfy the following requirements:
1. Pass all three levels of the CFA Program (mastery of the current CFA curriculum and passing three
six-hour examinations).
2. Have four years (48 months) of qualified work experience (or a combination of education and work
experience acceptable by the CFA Institute). However, individual level exams may be taken prior to
satisfying this requirement.
3. Become a member of the CFA Institute.
4. Adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.
19
1.9
SR
Top 10 Investment Banks in India
Name of the Banks
NO
1
J. P. Morgan
2
Goldman Sachs
3
Bank of America
4
Morgan Stanley
5
Citi Group
6
Deutsche Bank
7
Credit Suisse
8
Barclays Capital
9
UBS
10
Wells Fargo
20
Chapter - 2 Research Methodology:
The research work was carried out in andheri. Students doing professional course were interviewed for this
purpose. Structured questionnaire was provided to them and their responses were noted.
S.N.
Research function
Approach
Sources of data and tools for Primary source: Structured
data collection
questionnaire
via
in-depth
personal interviews.
Sampling Plan
Population
Definition-
students doing professional
courses
Sampling design – random
sampling for students doing
professional course
Sample size- 100 students
doing professional course.
The data collected through the questionnaires are presented in the following ways:
· Tables
· Bar charts
· Pie charts.
21
2.1 Scope of the study:
This study is conducted to find out the awareness of Investment banking among professional students. The
respondents selected are confined to the same field which will help us to analyse the problem statement of
the research. The scope of the study is limited only to the concerned area of study which cannot be justified
for any other place.
2.2 Data Collection:
Data collection is the process to gather information about the relevant topic research, it usually takes place
initially in the project, and is formalized through data collection plan which often contains the following
activity:
1. Pre collection activity on goals, target data, definition and methods.
2. Collection of data.
3. Resenting findings involving some form of sorting analysis.
2.3 Classification of data:
The correct information is the key to success. Data information is of two types; Primary Data and Secondary
Data. Primary data is information collected by researcher or person himself where is secondary data is
collected by other but utilized or used by researcher. Data can be classified under two categories depending
upon source utilized. These categories are:
• Primary data
•
Secondary data
1. Primary Data:
The study is largely based on the primary data which has been collected through the structured
Questionnaire Method.
•
Questionnaire:-
The data has been collected by administering a structured schedule of questions. The Questionnaire have
been prepared for understanding the awareness of Investment banking among professional students.
2. Secondary Data:
This type of data has already been collected by someone else and has already passed through statistical
process.
• Sources of Collection of Secondary Data
• Internet
• Books
• Journal
For this study Primary Data and Secondary Data both has been used for research topic.
22
2.4
Limitations of the study:
1.
It is assumed that all the information provided by the respondents is true and factual.
2.
Time was the main constraint as far as the depth of the research paper is concerned, it would be
unfair to assume that the sufficient amount of data has been collected within such a limited time
frame.
3.
The data collection has been done from a limited geographical area. Hence the finding and
conclusion have got their own limitations.
4.
The information given by the respondents might be biased because some of them might not be
interested to give correct information.
2.5 Objectives of the study
•
To examine the importance of Investment banking in India.
•
To find out its level of awareness among the professional students.
•
To provide Investment banking awareness that can develop the curriculum of tertiary institution.
2.6
Hypothesis
•
Ho: the awareness level of Investment banking among professional students is low.
•
Hi: the awareness level of Investment banking among professional students is High.
23
Chapter- 3 Review of literature
Some of the research works that came across during the study are as follows:
1. A study on “Investment Banking and Practices in India” an opportunity and challenges in
the Present competitive environment.
By- *Prof (Dr) Ashok Kumar Rath
Professor in Finance Department of Management Studies Trident Academy of Technology,
Bhubaneswar.
The investment banking industry have come under criticism for a variety of reasons, including
perceived conflicts of interest, overly large pay packages, cartel-like or oligopolic behavior, taking
both sides in transactions, and more. Investment banking has also been criticized for its opacity. Many
investment banks also own retail brokerages. The behavior may have led to investment banking
business or even sales of surplus shares during a public offering to keep public perception of the stock
favorable. Since investment banks engage heavily in trading for their own account, there is always the
temptation for them to engage in some form of front running – the illegal practice whereby a broker
executes orders for their own account before filling orders previously submitted by their customers,
there benefiting from any changes in prices induced by those orders.
24
2. Investment Banking as a Subject of Study
By - Anil Krishna Paul , Dr. Chitranjan Ojha, Dr. Pawan Kumar
• Anil krishna paul- Research Scholar, Magadh university.
• Dr. Chitranjan Ojha- Associate Professor ,Magadh University ,Budh Gaya, Bihar, India.
• Dr. Pawan kumar- Registrar & Asstt. Professor, ,Accman Institute Of Management ,Greater Noida,
India.
Investment Bankers may gradually replace Merchant Bankers in India. With Merchant Banks / Issuing
Houses in the UK already converting to Investment Banks ,or at least performing some of their functions,
India would not be far behind. Merchant Banking in India is non- fund -based except Underwriting
.Investment Banking is both fee and fund –based .Investment Bankers commit their own funds.
In sum , taking a balanced view ,we can safely conclude that there are ample opportunities for Investment
Banking in India . Since the investment Bank lends its name to the issue , it will imply that investors can
trust the issue .
Investment Bankers may gradually replace Merchant Bankers in India .Investment Banks make the market
for IPOs, thus assuring protection to the issuer about subscription.
Thus, Investment Banking as a subject of study is both simulating & rewarding as we have been seeing
observing from the Final Placements made in some of the Top Business Schools in INDIA , namely , IIM ,
KOLKATA/ IIM , AHMEDABAD /IIM ,BANGALORE etc.
25
3. Do Investment Banks Matter for M&A Returns?
By- Jack Bao, Fisher College of Business, Ohio State University
Alex Edmans, Wharton School, University of Pennsylvania and NBER
Mergers and acquisitions (M&A) are among the most critical decisions a CEO can make. Successful
mergers can create substantial synergies, while mis- guided acquisitions can lead to misallocation of
companies to parents unable to reap their full potential.
Since CEOs make M&A decisions rarely, they typically lack experience and seek counsel from
investment banks. The skilled-advice hypothesis is that banks help clients identify synergistic targets
and negotiate favorable terms. If banks indeed provide valuable advice, it is reasonable to expect that
the highest-quality advisors lead to the best outcomes.
This article finds a significant investment-bank fixed effect in the announce- ment returns to an
acquisition. The positive association between certain banks and high returns can be predicted by
clients using past performance a bank’s returns are persistent.
26
Chapter - 4 Data analysis, interpretation
With the help of questionnaire an attempt has been made to find out the extent of awareness regarding
awareness of investment banking among professional students. Both male and female students were taken
as respondents. Table 1 describes the characteristics of the survey participants.
Courses No. of Students
BAF
BMS
BFM
Total
No. of Males
20
20
15
55
No. of females
20
15
10
45
Table 1: Respondent Characteristics
As per the table total no. respondents are 100.
Analysis: Out of the total respondents questioned 45% (45 out of 100) are female students and 55% (55 out
of 100) are male students.
27
Questionnaire analysis- Awareness about Investment banking among the professional students In
analyzing the questionnaire, pie charts, bar diagrams have been used and results have been displayed in %
rather than counts, following is the analysis of questionnaires-
1.
Are you from finance background?
35%
Yes
No
65%
Analysis- By asking this question to the respondents that Are you from finance background, majority of
the respondents are from finance background as above chart shows 65 % (i.e. 65 out of 100 ) while only
35% (i.e.35 out of 100) are not from finance background.
28
2. Do you know what is investment banking?
Analysis- By asking this question to the respondents that Do you know what is investment banking,
majority of the respondents are unaware about it as above chart shows 72 % (i.e. 72 out of 100 ) don”t know
about it while only 28% (i.e.28 out of 100) are aware of this. As per the above chart majority of the students
are unaware about the investment bank.
29
3.
What is investment banking?
Option[A]-It is a special segment of banking operation that helps individuals or organizations raise capital.
Option[B]- business activity of accepting and safeguarding money owned by other individuals and entities.
42%
58%
Analysis - By asking this question to the respondents that What is investment banking, In response to the
above question, we found that 58% (ie 58 out of 100) of the respondents responded correctly while the rest
42%(ie 42 out of 100) are unaware of this and responded incorrectly about it. Investment banking is a
special segment of banking operations that helps individuals or organizations raise capital. As the above
chart shows only 58% of the students knew about it.
30
4. Which of the following is the role of investment banker?
Option [A]- Help their clients raise money in capital markets by issuing debt or selling equity in the companies.
Option[B]-Lending money to firms, customers and homebuyers
40%
60%
Analysis -
By asking this question to the respondents that Which of the following is the role of
investment banker?, In response to the above question, we found that 40%(ie 40 out of 100) of the
respondents responded correctly while the rest 60% (ie 60 out of 100) are unaware of this and responded
incorrectly about it. The major role of an investment bank is to help their client raise money in capital
markets by issuing debt or selling equity in the companies.
31
5. What is the minimum educational qualification required to work as an investment banker?
Analysis -
By asking this question to the respondents that What is the minimum educational
qualification required to work as an investment banker, majority of the respondents went with option
[A] as above chart shows 74 % (i.e. 74 out of 100 ) which is a wrong answer, while only 26% (i.e.26 out of
100) went with Option [B] which is a right answer. The minimum education qualification required to work
as an investment banker is a bachelor’s degree. One can start working as an investment banker when they
completed their bachelor’s degree.
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6. Which of the following are the most common job titles (from most junior to senior) in
investment banking?
Analysis - By asking this question to the respondents that Which of the following are the most common
job titles (from most junior to senior) in investment banking?, majority of the respondents went with
option [A] as above chart shows 40 % (i.e. 40 out of 100 ) while 30% (i.e.30 out of 100) went with Option
[B]. And the remaining 30%(ie 30 out of 100) students went with option [C]. The most common job titles
(from most junior to senior) in investment banking is Analyst, Associate etc.
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7. Do you know the different types of services provided by the investment bank?
Yes
No
20%
80%
Analysis - By asking this question to the respondents that Do you know the different types of services
provided by the investment bank?, majority of the respondents didn’t knew and said no as above chart
shows 80 % (i.e. 80 out of 100 ). while 20% (i.e.20 out of 100) knew about it and said yes.
34
8. Do you know the difference between commercial bank and investment bank?
Analysis -
By asking this question to the respondents that Do you know the difference between
commercial bank and investment bank?, majority of the respondents didn’t knew and said no as above
chart shows 70 % (i.e. 70 out of 100 ). while 20% (i.e.20 out of 100) knew about it and said yes and the
remaining 10% (ie 10 out of 100) are unsure about it. The major difference between an investment banking
and commercial banking is, Investment Banking is RELATIONSHIP BANKING while commercial Banking
is TRANSATION BANKING.
35
9. Do you know how an investment bank works?
Analysis - By asking this question to the respondents that Do you know how an investment bank works?,
majority of the respondents didn’t knew and said no as above chart shows 90 % (i.e. 90 out of 100 ). while
10% (i.e.10 out of 100) knew about it and said yes. The above chart shows that majority of the students
doesn’t know how does an investment bank works
36
10. Do you know the role of an investment bank in the underwriting process?
Analysis - By asking this question to the respondents that Do you know the role of an investment bank in
the underwriting process?, majority of the respondents didn’t knew and said no as above chart shows 75 %
(i.e. 75 out of 100 ). while 20% (i.e.20 out of 100) knew about it and said yes and the rest of 5%(ie 5 out
100) are unsure of it.
37
11. Do you know the top investment banks in India?
Yes
N0
10%
90%
Analysis - By asking this question to the respondents that Do you know the top investment banks in
India?, majority of the respondents didn’t knew and said no as above chart shows 90 % (i.e. 90 out of 100 ).
while 10% (i.e.10 out of 100) knew about it and said yes.
38
12. Do you know the different type of securities available in the market?
10%
Yes
No
90%
Analysis - By asking this question to the respondents that Do you know the different type of securities
available in the market?, majority of the respondents said yes as above chart shows 90 % (i.e. 90 out of
100 ) while 10% (i.e.10 out of 100) said no.
39
13. Do you know which securities are high risky?
Analysis - By asking this question to the respondents that Do you know which securities are high risky?,
majority of the respondents said yes as above chart shows 80 % (i.e. 80 out of 100 ) while 20% (i.e.20 out
of 100) said no.
40
14. Do you know which securities gives high returns?
Analysis - By asking this question to the respondents that Do you know which securities gives high
returns? majority of the respondents said yes as above chart shows 80 % (i.e. 80 out of 100 ) while 20%
(i.e.20 out of 100) said no.
41
15. Do you have a D-mat account?
2%
Yes
No
98%
Analysis - By asking this question to the respondents that Do you have a Demat account? majority of the
respondents ie 98% (ie 98 out of 100) said that they don’t have a d-mat account, while 2% (ie 2 out of 100)
said that they have a d-mat account. Demat account means an account that allows investors to hold their
shares in an electronic form. Stocks in Demat account remain in dematerialized form.
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16. Do you know what is CFA course?
10%
10%
Yes
No
Maybe
80%
Analysis- - By asking this question to the respondents that Do you know what is CFA course majority of
the respondents are unaware about it as above chart shows 80 % (i.e. 80 out of 100 ) don`t know about it
while only 10% (i.e.10 out of 100) are aware of this. And the rest 10% (ie 10 out of 100) are unsure.
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17. Do you know the full form of CFA course?
Analysis- By asking this question to the respondents that Do you know the full form of CFA course
majority of the respondents are unaware about it as above chart shows 80 % (i.e. 80 out of 100 ) don`t know
about it while only 10% (i.e.10 out of 100) are aware of this. And the rest 10% (ie 10 out of 100) are unsure.
44
18. According to you how much an Investment banker earns per year?
Analysis- By asking this question to the respondents that According to you how much an Investment banker
earn per year? majority of the respondents went with 7,00,000. as above chart shows 60 % (i.e.60 out of
100) which is a wrong answer, while 40% of respondent went with 9,02,800 (i.e.40 out of 100) which is
right answer.
45
19. According to you is Investment banking a good career option?
Analysis- By asking this question to the respondents that According to you is Investment banking a good
career option? majority of the respondents said yes as above chart shows 60 % (i.e. 60 out of 100 ) while
30% (i.e.30 out of 100) said no. And the rest 10% (ie 10 out of 100) are unsure. As per the above chart
majority of the students feel like investment banking is a good career option.
46
20. Would you like to become an Investment banker in future?
Analysis- By asking this question to the respondents that Would you like to become an Investment
banker in the future?, majority of the respondents said Yes as the above chart shows 50% (i.e. 50 out of
100 ) and 40% (i.e.40 out of 100) said no and the remaining 10%(ie 10 out of 100) are unsure.
47
Chapter - 5 Conclusion
The survey has given us an idea about the state of awareness of Investment banking among the Professional
students. Some of the respondents are aware about some of the basic concepts of Investment banking but it
was also felt that a significant percentage of the respondents were not able to respond correctly. Moreover,
majority of the respondents are not aware about the investment banking at all. Further, not all of the
respondents are clear about the role of an investment banker. Role of an investment banker is very
important if one wants to be a investment banker in the future they should know what does an investment
banker do. A good number of students don‟t know the minimum education qualification require to be an
investment banker means they have no idea as how and when they can get a job as an investment banker.
Most of the students said that they don’t know about CFA course at all. Majority of the respondents also
stated that they don’t know the full format CFA course. When asked to students about “is investment
banking a good career option.?” Majority of them said yes it is an good career option and when asked if they
want to be an investment banker in the future majority of them said yes which shows that the majority of
them wants to become investment banker in future.
Therefore, it was felt that there should be some kind of a program or session for students in the college
about what is investment banking? And what are the role of an investment banker?. How one can become a
investment banker? Etc. This would help to create some state of awareness of investment banking among the
students.
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5.1 References
1. Investment Banking by
Joshua Rosenbaum (Author), Joshua Pearl (Author), Joseph R.Perella
(Foreword), Joshua Harris (Afterword)
2. Investment Banking For Dummies by Matt Krantz, Robert R. Johnson.
3. A study on “Investment Banking and Practices in India” an opportunity and challenges in
the Present
competitive environment. - by Prof (Dr) Ashok Kumar Rath.
4. “Do Investment Banks Matter for M&A Returns?”
- by Bao, J., and A. Edmans (2015).
5. A Study of the Role of Investment Banker Human Capital in Acquisitions
- by Thomas J. Chemmanur, Mine Ertugrul, Karthik Krishnan.
6. https://www.investopedia.com/terms/i/investment-banking.asp
7. https://corporatefinanceinstitute.com/resources/careers/jobs/investment-banking-overview/
8. https://www.howtobecome.com/how-to-become-an-investment-banker
9. https://www.wikihow.com/Become-an-Investment-Banker
10. https://business.mapsofindia.com/investment-industry/top-10-investment-banks.html
11. Investment banking by G. Iannotta
12.https://econ.duke.edu/sites/econ.duke.edu/files/fileattachments/Investment%20Banking%20Demystified.
pdf
13. VAULT CAREER GUIDE TO INVESTMENT BANKING 2008 EDITION
By- TOM LOTT, DEREK LOOSVELT. WILLIAM JARVIS AND THE STAFF OF VAULT
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5.2 Questionnaire
1. Are you from finance background?
2. Do you know what is investment banking?
3. What is investment banking?
4. Which of the following is the role of investment banker?
5. What is the minimum educational qualification required to work as an investment banker.?
6. Which of the following are the most common job titles (from most junior to senior) in investment
banking?
7. Do you know the different types of services provided by the investment bank?
8. Do you know the difference between commercial bank and investment bank?
9. Do you know how an investment bank works?
10. Do you know the role of an investment bank in the underwriting process?
11. Do you know the top investment banks in India?
12. Do you know the different type of securities available in the market?
13. Do you know which securities are high risky?
14. Do you know which securities gives high returns?
15. Do you have a D-mat account?
16. Do you know what is CFA course ?
17. Do you know the full form of CFA course?
18. According to you how much a Investment banker earn per year?
19. According to you is Investment banking a good career option?
20. Would you like to become a Investment banker in the future?
50