Where Investment Banking Came From

Investment banking may seem like a modern innovation, but that’s not the case at all. Many of the financial products and services pitched by investment banks today trace their history back to the days of maritime commerce during the age of the Renaissance.

This appendix gives you a greater appreciation for the role investment banking has had during the ages. You see how investment banking has changed and how that evolution explains the role it plays to this day. You also get a sense of the complicated relationship between investment banks and traditional banks over time, and see why that interaction is so important.

The Roots of Investment Banking

Investment banking has somewhat of a tortured past, rising out of what was originally traditional banking services. And although investment banking serves the same primary role as traditional banks, getting money from those who have it to those who need it, the route by which investment banks make this happen creates a distinctly unique industry with its own culture, characteristics, and dynamics.

Evolving out of traditional banks

The development of banking remains one of the greatest accomplishments in history, and one critical for accelerating the rate of progress through the ages. Banks were the first real institutions that had the job of getting money into the hands that needed it most.

Scholars figure there was some semblance of banking going on in Ancient Greece, the Roman Empire, ...

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