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Definition of Investment banking

Investment banks are institutions which assist commercial organizations in raising long-term capital through the sale of shares, stocks, debentures and bond. It is a system where banks arrange long-term funds for business and industry. They work both as financiers as well as underwriters. As financiers they themselves provide long-term funds to business and industry.
As underwriters they work as middlemen between business corporation and investors. They undertake the responsibility of selling shares or debentures of the corporation to the general public for commission. In the absence of failure of the public to subscribe in full, they take the unsubscribed portion of the shares or debentures underwritten by them
The system was first developed in Germany in the middle of the nineteenth century. A number of investment banks were established in Germany after 1853 for promoting industrial development.