Question

Discuss the separation of commercial banking and investment banking, over time. Comment on how useful and appropriate this separation is today; should this separation be modified? Please provide references.

Answer 1

Earlier during the 2007 crisis, the main reason cmae out to be the integration of commercial banking and investment banking. Since they worked together we have seen the results of crisis 2007.

So to separate them , Glass steagall act came into picture in 2007. It was told that a bank can't perform commercial and investment banking simultaneously . They need to install Chinese firewalls to separate out their roles.

I believe today yes banks have separated out the two roles. Thought not fully but much integration has reduced. I support this fact . Yes separation between these two roles should be finite. As it will demote use of other information for self profits.