Date of Award

1-1-2026

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Yu, Sherry

Area of Concentration

Economics

Abstract

This thesis provides a comprehensive analysis of the United States investment banking industry, focusing on the structural, macroeconomic, and regulatory factors that shape its performance and evolution. Using publicly available data from institutional sources such as the Federal Reserve, SIFMA, MSCI, and the FDIC, this study examines how variables including interest rates, credit spreads, equity valuations, and market volatility influence the activity and profitability of investment banks between 2015 and 2025. The research integrates theoretical perspectives from industrial organization and financial-cycle frameworks with empirical data to explain the cyclical nature of deal activity, capital formation, and market confidence. Findings demonstrate that investment banking performance is highly sensitive to monetary policy and financial conditions. Periods of low interest rates and narrow credit spreads correspond to strong issuance, advisory, and trading revenues, while tightening cycles and elevated volatility lead to slower deal flow and higher risk aversion. Nonetheless, results also show that diversification across products and clients allows leading U.S. banks to remain profitable even during restrictive phases. The study highlights the stabilizing role of regulatory frameworks such as Basel III and the growing importance of technological innovation and sustainable finance in shaping competitive advantage. This research contributes to the understanding of investment banking as a key component of financial intermediation, emphasizing its dual role in fostering economic growth and maintaining market stability. The analysis offers insights for policymakers, investors, and scholars seeking to evaluate the resilience and strategic adaptation of financial institutions in changing macroeconomic environments.

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