What are the risks associated with merchant banking

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Reference no: EM131313450

Following is an excerpt from "Merchant Banking: Past and Present" by Valentine V. Craig, published by the Federal Deposit Insurance Corporation www.fdic.gov/bank/analytical/banking/2001sep/article2.html):

Merchant banking has been a very lucrative-and risky- endeavor for the small number of bank holding companies and banks that have engaged in it under existing law.

Recent legislation has expanded the merchant-banking activity that is permissible to commercial banks and is therefore likely to spur interest in this lucrative specialty on the part of a greater number of such institutions.

a. What is meant by "merchant banking"?

b. What are the risks associated with merchant banking?

Reference no: EM131313450

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