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Investment BankingInstitutions, Politics, and Law$
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Alan D. Morrison and William J. Wilhelm, Jr.

Print publication date: 2007

Print ISBN-13: 9780199296576

Published to Oxford Scholarship Online: May 2007

DOI: 10.1093/acprof:oso/9780199296576.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 25 October 2020

The Modern Industrial Revolution

The Modern Industrial Revolution

(p.225) 8 The Modern Industrial Revolution
Investment Banking

Alan D. Morrison (Contributor Webpage)

William J. Wilhelm Jr.

Oxford University Press

This chapter argues that the most important factors influencing the development of investment banks in the second half of the 20th century were technological. The emergence first of large scale batch computers and later of high-powered desktop machines resulted in the computerization of many aspects of investment banking. At the same time, new developments in financial economics resulted in the codification of many activities that formerly had relied upon tacit skill. These businesses, which previously relied upon unquantifiable human capital, were transformed in this period. This trend is related to the rise of institutional investment, and it is argued that it manifested itself in the development of formal risk management systems. Traditional relational investment banking skills found new applications. The chapter traces the emergence of the modern M&A advisory business, and argues that the junk bond market gave investment bankers an opportunity to return to an activist investor role.

Keywords:   computerization, tacit skill, human capital, institutional investment, risk management, M&A advisory, junk bonds

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