Bank on the High-Risk Capital Market. The Postulates of Active Participation

Abstract

The leading role of a bank as a primary financing institution of the enterprises’ needs is not to undermine. Banks, fulfilling the lender function and an intermediary on financial market, support entrepreneurs in financing their business initiatives. However, the problem faced by entrepreneurs is, on the one hand, raising capital to start up their own business, and on the other the implementation of innovative projects that carry a high risk. Venture capital/private equity, business angels or seed funds, creating a high-risk capital market try to meet such needs.

Banks undertake the activity on this market only to a limited extent. This is due to cautious lending policy adopted, difficulties in assessing risk, lack of security or lack of confidence to the new or innovative entrepreneurs. However, to ensure the development of entrepreneurship, and along with it the economic growth of a country, they should not limit in their activities to crediting or organizing capital. They themselves should be more active by creating and managing high-risk funds. It is a legitimate postulate, considering the financial possibilities of the largest banks in Poland and their developed investment banking departments, condusive an intellectual capital and organizational possibilities.

The aim of the study is to present the legal and economic determinants of banks’ activities on the high-risk capital market and the evaluation of their activities on this market. The paper also aims to show the high-risk capital market as an area with great development potential for the activities carried out in the field of investment banking services in major domestic commercial banks.