Development of capital market plays an important role in financial development and therefore  economic development in the country. The basic function of capital market is to transfer financial resources from their owners to production and service. This function leads to business progress and employment.

The Efficiency of capital market is impossible without the necessary institutions. Most of these institutions haven’t been established in the capital market of Iran. This problem is one of the major causes for underdevelopment in this section of economy. Investment bank is a typical example in such institutions.

In this dissertation, investment banking is defined and a brief history of it is mentioned and the experience of  some countries such as the United States has briefly been described. Then the necessity of establishing investment banks in Iran is reviewed and some related problems and difficulties are stated.

The Instruments of data collection in this research are library studies and interview with experts in financial markets and institutions and the law experts.

To conclude some solutions for the stated problems and difficulties are suggested.