When students think of finance, the two top professions that loom over their minds are corporate finance and investment banking. If you are stuck between these options then the best way to find out what’s right for you is by understanding these professions in detail. While their learning pathway is the same, each of these professions demands a different skill set. The key to choosing the right career option is by checking where your interest level lies. Corporate finance deals with capital budgeting, capital structure, and working capital. A career in corporate finance would mean being at the forefront of making decisions for your company that has a financial impact. Investment Banking on the other hand, as the name suggests, is all about finding the right investments for companies and individuals. Both these professions are equally challenging and offer multiple growth opportunities. To understand their similarities and differences in detail, here’s a detailed comparison.
Differences Between Corporate Finance And Investment Banking
|Differentiators||Corporate Finance||Investment Banking|
|Learning Pathway||Chartered Financial Analyst (CFA)||Chartered Financial Analyst (CFA)|
|Top hiring companies||
|Salary||Average salary 9 LPA to 12 LPA||Average salary 12 LPA to 13 LPA|
What is Corporate Finance?
Corporate finance is a department of finance that looks into the capital structure of a corporation, including its funding and the actions that management takes to generate more and more revenue for the company. Corporate finance also includes the tools and analysis utilized to prioritize and distribute financial resources. The ultimate purpose of corporate finance is to maximize the value of a business through the planning and implementation of resources while balancing risk and profitability. Corporate finance is concerned with how businesses fund their operations in order to maximize profits and minimize costs.
What is Investment Banking?
To explain Investment Banking in simple terms, we can say that it’s a division of banking that is created with the purpose of generating capital for governments, firms and individuals related to them. Full-service banks offer all these services as they plan and manage finance projects for larger organizations. Many full-service or investment banks are associated with larger global banks like Goldman Sachs, JP Morgan, Bank of America, Credit Suisse and Deutsche Bank. There are popular investment banks in India as well that are trusted by plenty of people, some of them are JM Financial Institutions and Securities, IDBI Bank, MAPE Capital Advisors, etc.
Corporate Finance vs Investment Banking: Better Career Option
As mentioned earlier, corporate finance and investment banking, both are professions that offer multiple opportunities. The choice depends on your interest level. If you wish to work on different financial aspects of a company then a position in Corporate Finance will enable you to work on a wider range of financial activities. However, if you find the world of investments more exciting then Investment Banking is the way to go.
We hope that with this detailed article on Corporate Finance vs Investment Banking, you’ve received an in-depth understanding of what to expect from each of these professions. If you are interested in getting into these exciting and equally dynamic fields, then pursuing a CFA degree is the direction to take. To know more about the Chartered Financial Analyst course click on the WhatsApp icon at the side of this blog and get in touch with our experts directly.
Which is better: corporate finance or investment banking?
In terms of compensation and popularity, investment banking is a better option as compared to corporate finance.
Is corporate banking part of investment banking?
Corporate banking is quite different from investment banking. Corporate banking involves banking services, including loans, especially to companies. Investment banking is all about generating capital through investments.
Does corporate finance include M&A?
Yes, corporate finance does involve merger and acquisition deals as part of the profile.
Is wealth management considered a part of corporate finance?
Wealth management helps grow an HNWIs wealth, while corporate finance manages a company’s finances.