Role of the U.S. Financial System

Role of the U.S. Financial System

From time to time, corporations and other types of business must raise capital to initiate, continue, or expand operations. Raising capital could be done in many different ways, from borrowing money from financial institutions to issuing securities. This type of financial activities takes place within financial markets. A financial market is “the meeting place for people, corporations, and institutions that either need money or have money to lend or invest” (Block and Hirt, pg. 13, 2005). The Under Secretary for Domestic Finance Robert K. Steel described financial markets as “a bridge, connecting suppliers of capital with users of capital. They connect those who have resources to invest with those who could use this capital to turn new ideas into businesses, generating jobs and contributing to the economy” (May 17, 2007). The purpose of this paper is to describe the role of investment bankers, the sources of capital available to corporations, and the means corporations use to raise short-term and long-term capital through this financial system.

The Role of Investment Bankers

When raising capital, individuals and organizations should enroll the assistance of investment bankers to advise them on the best approach to raise capital. Investment bankers can also advise on mergers and acquisitions representing the organization or the individual during the transaction. The main objective of investment