Handbook of Empirical Corporate Finance SET

Chapter 5

Banks in Capital Markets*

Steven [e-mail]    Columbia Business School, Uris Hall, 3022 Broadway, New York, NY 10027, USA

Manju [e-mail]    Fuqua School of Business, 1 Towerview Drive, Duke University and NBER, Durham, NC 27708, USA

Abstract

Banks are an important source of funding in economies all around the world, making it vital to understand how banks directly and indirectly affect funding through capital markets. Few issues have perhaps been as controversial as the appropriate scope of bank activities and whether banks should participate directly in capital market activities, providing both lending and other services, such as underwriting. We review the arguments and theoretical models that consider the consequences ...