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  3. What is merchant banking? Why does it grow rapidly in Hong Kong? Merchant bankin

What is merchant banking? Why does it grow rapidly in Hong Kong? Merchant bankin

游客2025-06-21  16
问题 What is merchant banking? Why does it grow rapidly in Hong Kong?
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答案 Merchant banking:
    —providing financial advice and a wide range of special services for companies in the area of finance and management.
    —main functions in merchant banking:
    -act as both brokers and dealers in wide variety of securities;
    -provide research services and give consultancy services on all varieties of management problems;
    -money market instruments are traded;
    -underwrite the debt issue of government and manage the sale of corporate debt and stock;
    -serve as agents to handle the payment of dividends to shareholders;
    -handle mergers, acquisitions, interest rate Swaps, leveraged buyouts, and other fee-earning activities;
    -arrange or participate in syndicated lending/project financing;
    -provide advisory/underwriting services in IPO/placement.
    The reasons for the rapid growth of merchant banking in Hong Kong:
    —Institutionalization
    -Growing importance of institutional investors in the market place has provided a chance for the expansion of merchant banks.
    -Since 1990s, the main players of the stock market has shifted from individuals to the institutions.
    —Deregulation
    -Competition across borders becomes available as the relaxation of regulations in the US and some European states and the development of Euro-market.
    -Because of the capital limitation, individuals must seek for help from the merchant banks which have considerable scale in global operations.
    —Securitization and disintermediation
     -The change of the source of corporate financing from bank loans to merchant banks’ services has increased the development of merchant banking business. Many corporations like to seek financial arrangement through merchant banks.
    —Advanced technology
    -Since the communication ability has been intensified by the advanced technology, the information exchange among merchant bankers and other financial institutions becomes more vigorous.
    —Industrial organization restructuring
    -The environment for file growth of merchant banking has been created with the rapid restructuring of industrial organization, such as the breaking-down of conglomerates, introduction of leverage-buy-out, favorable acceptance of "junk" bond.
    —Globalization
    -From 1990s onwards, a global market has been laid down by the creation of the Euro-market and the increasing use of commercial papers and other financial instruments and the impetus for the growth of merchant banking business has been provided by this favorable conditions.
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