Defending the economic role of investment banks
Question
Someone tells you investment banking adds nothing of value to society. How would you respond?
Short answer
Argue from economic function. Banks help allocate capital by connecting savers with firms that need funding, price and underwrite securities, provide liquidity and market making, advise on mergers that can create efficiency, and help clients manage risk. Acknowledge fair criticisms such as conflicts and excess risk-taking to show balance.
Adapted from Crack, Heard on the Street, Q5.2.25, p.50; question and answer rewritten by SelfMadeQuant.com.
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