Does Economics Help with Investment Banking Careers?
What are some possible career paths in economics? Today, we are talking about Investment Banking and whether majoring in economics is a good path towards that career.
We will discuss the following
What is investment banking
Types of jobs in investment banking
Salaries in investment banking
Is economics a good major to prepare you for investment banking
What is investment banking?
Investment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting, originating, issuing, and distributing securities. Investment banks also provide advice on financial strategy and provide services such as mergers and acquisitions, and corporate restructuring.
Types of jobs in investment banking
Investment Banker: An investment banker typically works with clients to raise capital by issuing and selling securities, and also provides financial advice and helps companies with mergers and acquisitions.
Equity Research Analyst: An equity research analyst provides research and analysis on companies and industries to help investment bankers and portfolio managers make investment decisions.
Sales and Trading: Sales traders and traders buy and sell securities on behalf of clients, using their knowledge of market conditions and the bank's inventory to execute trades.
Risk Management: Risk management professionals are responsible for identifying, assessing, and managing risks associated with an investment bank's operations.
Investment Banking Analyst: Investment Banking Analysts are responsible for providing analytical and administrative support to investment bankers, including the preparation of presentations and financial models.
Private Equity Analyst: Private Equity Analyst works with a portfolio of companies and is involved in the entire life cycle of a private equity investment, including sourcing deals, performing due diligence, negotiating terms, and monitoring the performance of portfolio companies.
These are just a few examples, but there are many other roles and sub-roles that exist within the field of investment banking.
Salaries in Investment Banking
This will vary drastically by level of experience and location. For this video, I will focus on the Cincinnati area, where I am located. The average salary, according to Salary.com, is $81,910. The range for this position is $74,895 to 91,857. According to Salary. com the cost of living in Cincinnati is 10.7% lower than the national average. Keep that in mind!
Economics for Investment Banking
Economics is a good major for those interested in investment banking because it provides a strong foundation in financial and quantitative analysis, as well as an understanding of how businesses and markets operate. Economics majors learn to analyze data and interpret economic trends, which are skills that are highly valued in investment banking. They also study macro and microeconomics, which provides a good understanding of the economy, how businesses operate and how they are affected by the economy.
Additionally, many of the key concepts and theories studied in economics, such as supply and demand, market structure, and the time value of money, are directly applicable to investment banking.
That being said, it's not necessary to major in economics to break into investment banking, and many successful investment bankers have degrees in other fields such as finance, accounting, mathematics, engineering and computer science. Ultimately, investment banking firms are looking for candidates who possess a strong analytical and quantitative skill set, an ability to think strategically and an understanding of the financial markets.
Another reason to study economics! What other questions do you have about economics?
