October 23, 2012 at 12:47 PM EDT
Banks Account for 30% of Private Equity Transactions
From Harvard Business School Working Knowledge From a “too big to fail” perspective, banks with private equity operations can be perceived as dangerous. Wary of this connection, the Volcker Rule in the Dodd-Frank Act attempts to limit banks’ exposure to private equity and hedge funds. A new working paper sides somewhat with concerns of regulators, while [...]

From Harvard Business School Working Knowledge

From a “too big to fail” perspective, banks with private equity operations can be perceived as dangerous. Wary of this connection, the Volcker Rule in the Dodd-Frank Act attempts to limit banks’ exposure to private equity and hedge funds. A new working paper sides somewhat with concerns of regulators, while admitting there is a lot to learn.

But the big finding here might be how widespread PE activity by banks has become: “We find that banks are surprisingly large players in the private equity market, accounting for 30 percent of transactions between 1983 and 2009, with transition values exceeding $700 billion,” write the authors, Lily H. Fang, Victoria Ivashina, and Josh Lerner. Those numbers make the paper’s findings even more important. Read the working paper, Combining Banking with Private Equity Investing.

Technorati Tags: banking regulation, big banks, Dodd-Frank Act, private-equity, Volcker Rule

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