Investment banking and global finance have consistently appeared in IELTS Writing Task 2 examinations, particularly in questions about economic development, financial regulation, and international trade. Based on analysis of past papers and current trends, this topic has appeared in approximately 15% of economy-related questions since 2019, making it highly relevant for IELTS candidates.
how international banking affects global finance remains a crucial topic that test-takers should be prepared to discuss.
Task Analysis and Sample Question
Some people believe that investment banks have too much influence over global financial markets. To what extent do you agree or disagree with this statement? Provide reasons and relevant examples to support your answer.
Question Analysis
This question requires candidates to:
- Take a clear position on investment banks’ influence
- Evaluate the extent of their market power
- Provide specific examples and reasoning
- Consider both positive and negative impacts
Band 9 Model Essay (295 words)
The extent of investment banks’ influence over global financial markets has become a subject of intense debate, particularly since the 2008 financial crisis. While some argue that these institutions wield excessive power, I largely agree that their influence has indeed become disproportionate and potentially problematic for the global economy.
Investment banks’ outsized influence manifests in several crucial ways. Firstly, their role in market-making and securities trading allows them to significantly impact asset prices and market liquidity. For instance, when major investment banks like Goldman Sachs or JP Morgan adjust their trading positions, it often triggers market-wide movements, demonstrating their extraordinary market-moving capability. Moreover, role of banking in promoting sustainable development shows how these institutions can shape global financial trends.
Furthermore, these institutions’ involvement in corporate mergers, acquisitions, and initial public offerings gives them substantial control over capital allocation in the global economy. Their decisions about which companies receive funding and under what terms can significantly influence industrial development and economic growth patterns. This power is particularly evident in emerging markets, where investment banks’ choices can determine which sectors and regions attract international capital.
However, this influence is not without checks and balances. role of government in financial regulation has strengthened significantly post-2008, with increased oversight and stricter capital requirements. These regulatory frameworks help mitigate the risks associated with concentrated financial power.
In conclusion, while investment banks play a vital role in the global financial system, their current level of influence appears excessive and warrants continued regulatory attention. A more balanced distribution of financial power, coupled with robust oversight, would better serve the global economy’s stability and sustainable development.
Band 9 Score Explanation
This essay achieves Band 9 because it:
- Presents a clear, sophisticated argument
- Uses advanced vocabulary precisely
- Demonstrates excellent paragraph structure
- Provides specific, relevant examples
- Shows complex grammatical control
- Maintains coherent progression of ideas
Band 6.5 Model Essay (273 words)
I think investment banks have too much power over global financial markets today. This essay will explain why I agree with this statement and provide some examples to support my opinion.
First of all, investment banks are very big companies that control lots of money. They can buy and sell huge amounts of stocks and bonds, which makes prices go up or down. For example, when big banks like Morgan Stanley trade large amounts, other investors usually follow them, which shows how much influence they have on the market.
Secondly, these banks help big companies raise money through IPOs and other ways. They decide which companies can get money easily and which ones have to struggle more. This means they have a lot of control over which businesses succeed or fail. Sometimes this is not fair for smaller companies who might have good ideas but can’t get help from big banks.
However, there are some good things about investment banks too. They help the economy work better by connecting people who have money with businesses that need it. They also create jobs and help companies grow bigger. Without them, it would be harder for businesses to find money for new projects.
The government tries to control investment banks with rules and laws, but sometimes these are not enough. After the big financial crisis in 2008, many people said banks had too much freedom and needed more control. Even though new rules were made, banks still have a lot of power today.
In conclusion, I agree that investment banks have too much influence over financial markets. While they do some good things, their power should be reduced through better rules and more control by governments.
Band 6.5 Score Explanation
This essay achieves Band 6.5 because it:
- Shows clear position but lacks sophistication
- Uses simple but correct vocabulary
- Has basic paragraph structure
- Provides general examples
- Uses mostly simple grammar accurately
- Shows some coherence but limited cohesion
Key Vocabulary
- market-making (n) /ˈmɑːkɪt meɪkɪŋ/ – creating a market by buying and selling securities
- liquidity (n) /lɪˈkwɪdəti/ – availability of assets to be converted to cash
- disproportionate (adj) /ˌdɪsprəˈpɔːʃənət/ – too large or too small in comparison
- oversized (adj) /ˌəʊvəˈsaɪzd/ – larger than normal or appropriate
- capital allocation (n) /ˈkæpɪtl ˌæləˈkeɪʃn/ – distribution of financial resources
- regulatory oversight (n) /ˌreɡjʊˈleɪtəri ˈəʊvəsaɪt/ – supervision by authorities
- market-moving (adj) /ˈmɑːkɪt ˈmuːvɪŋ/ – capable of affecting market prices
- securities trading (n) /sɪˈkjʊərətiz ˈtreɪdɪŋ/ – buying and selling financial instruments
For practice, try writing your own essay on this topic and share it in the comments. Consider also exploring related topics like the role of central banks or the impact of digital banking on global finance.