Commercial and Investment Banks

Commercial and investment banks are both financial intermediaries and brokers that organize the flow of funds between lenders and borrowers, thus facilitating the savings and investment processes. Commercial banks offer services to the general public and are depository institutions. Their services include receiving deposits, providing checking services and automated teller machines, making loans to individuals (e.g., mortgages and auto loans) and businesses, and offering basic investment products. Investment banks, on the other hand, help individuals, businesses, and governments raise financial capital by underwriting security issues. They also facilitate mergers and acquisitions as well as possibly engage in proprietary trading in equity, debt, and derivatives. In the United States, the Glass-Steagall Act (i.e., the Banking Act of 1933) separated these two sets of activities in response ...

  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles