Lehman Brothers. Merrill Lynch. AIG. HBOS. Bradford & Bingley. Wachovia. The list of credit crunch casualties is lengthening. For MBA hopefuls who covet a job in investment banking or financial services, the news is not encouraging. But what does it mean for the MBA market as a whole?

Professor Michael Luger, dean of Manchester Business School, says: “MBA applications have traditionally been counter cyclical with students taking the view that an economic downturn is a good time to take a career break – a chance to retool and go back into the labour market with more value.”

Richard Wheatcroft, MBA masters programme director at the Open University Business School, agrees: “People who get a redundancy package often decide that it’s a good time to do an MBA while the labour market is unattractive. But we also find a slight increase in registrations from people still in employment who want to make themselves more valuable to their employer.”

So far, 2008 appears to be following this pattern. A clear indicator is the increasing number of candidates taking the GMAT entry exam.

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“Our data shows an inverse relationship between downturns in the economy and GMAT test-taking volume,” says Dave Wilson, president and chief executive of the Graduate Management Admission Council (GMAC), which administers GMAT.

“For example, during the recession from 1989 to 1991, GMAT volume grew to 240,000. Again, during the dot.com bust era, volume peaked – with 2002 as the record year to date (245,000). And 2008 is already ahead of that year.”

Many business schools report that the bulge in GMAT takers is swelling the applicant pool. Lancaster University Management School, for example, has close to 900 MBA applicants this year (200 more than last year) chasing a maximum of 90 places.

But what about the MBA job market? Newly minted MBA graduates with their sights set on the City or Wall Street may have to think again. But financial services accounts for only a small proportion of MBA jobs.

“One of the great advantages of an MBA is that you develop a set of generic skills that are not sector specific and can be broadly applied in business,” says Rob Dixon, dean of Durham University Business School.

MBA graduates appear to be rising to the challenging conditions. Some 57 per cent of job-seeking MBA students who will complete business school this year had at least one job offer before finishing their studies, according to the 2008 Global MBA Graduate Survey conducted by GMAC. Not since the 2001 survey has such a large proportion had jobs lined up in advance of graduation.

Wilson says: “The MBA market is about far more than Wall Street or Threadneedle Street. It is about marketing, sales, accountancy, consul-tancy and more arenas. Although the global economy is struggling to regain its footing, newly minted MBAs are still highly sought after.”

Graduates of full-time programmes with job offers expect a salary increase of 74 per cent above their preMBA job, on average. For part-time programmes the expected bump in pay averages 53 per cent.

“Challenging but not daunting” is how Grant Phillips, acting head of careers at Saïd Business School in Oxford, characterises the job market. “While positions in investment banks will be harder to come by, there are opportunities in banking areas such as private wealth management, asset management and, dare I say it, risk management.”

He also predicts more jobs in the regulatory and compliance field. It is, after all, an ill wind that blows nobody any good even on Wall Street.