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Finance on Commercial and Investment Banking - Essay Example
Author : niahyatt
Finance & Accounting
Pages 10 (2510 words)
Commercial and Investment Banking Table of Contents Answer 1 3 Answer 2 4 Answer 3 6 Answer 4 7 Answer 5 7 Answer 6 9 Answer 7 10 Answer 8 11 References 12 Answer 1 There are various advantages as well as disadvantages of relationship lending. It should also be noted that with alterations in the competitive circumstances surrounding an organization, the lending relationships alter as well…
Lending relationships, particularly those that are long term associations make it simpler for small sized organizations to have access to outside funds. Owing to the risky nature of the small firms, it becomes very difficult for them to borrow funds if they lack lending relationships with banks. However, such kind of organizations predictably attempt to get access to further diversified sources of funds, after they have formed long term lending associations with banks. Thus, it can be stated that the organization’s preceding lending association with a bank enables it to gain admission to the public securities market. Furthermore, the association of the organization with a bank persists to play a crucial role even when the organization is capable of issuing public securities. Nonetheless, when an organization diversifies its sources of funds, it has to face certain consequential drawbacks. The funding diversification restricts the bank’s readiness to assist the organization when it faces financial distress. This restriction in the bank’s flexibility is true even when the organization had taken up only diminutive values of public debt. ...