Finance & History Investment Banking
Jan 28, 2025
In this engaging discussion, Caroline Fohlin, a Professor of Economics at Emory University, and Hugo Bänziger explore the rise of U.S. dominance in the investment banking sector. They analyze the historical factors that have granted U.S. banks an edge over their European counterparts. The conversation also delves into the slow technological adoption in Europe and how it impacts trading efficiency. Additionally, the complex relationship between investment banks and government regulations is revealed, shedding light on the intricate dynamics shaping global finance.
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Recent Dominance
- American investment bank dominance is a relatively recent phenomenon, significantly increasing post-WWII.
- Key factors include regulatory differences, the dominance of US stock exchanges, and the sheer size of the American economy.
Drivers of US Market Growth
- The rise of mutual funds, pension funds, and a strong demand for securities propelled US capital market growth.
- Foreign investment and an innovative economy further fueled this expansion.
Deutsche Bank's ADR Program
- Hugo Bänziger, while on the board of Deutsche Bank, developed an ADR program to list the bank's stock on the NYSE.
- This was done to tap into the deep liquidity of the US markets to finance growth.