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Banking

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A commercial bank is a type of financial intermediary and a type of bank. Commercial bank has two possible meanings:

• Commercial bank is the term used for a normal bank to distinguish it from an investment bank.

This is what people normally call a "bank". The term "commercial" was used to distinguish it from an investment bank. Since the two types of banks no longer have to be separate companies, some have used the term "commercial bank" to refer to banks which focus mainly on companies. In some English-speaking countries outside North America, the term "trading bank" was and is used to denote a commercial bank. After the great depression and the stock market crash of 1929, the U.S. Congress passed the Glass-Steagal Act 1930 (Khambata 1996) requiring that commercial banks only engage in banking activities (accepting deposits and making loans, as well as other fee based services), whereas investment banks were limited to capital markets activities. This separation is no longer mandatory.

It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds.

• Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking).

Assets and Liabilities of Commercial Banks in the United States

• Glass-Steagal Act

• Tiwari, Rajnish und Buse, Stephan (2006): The German Banking Sector: Competition, Consolidation and Contentment, Hamburg University of Technology (TU Hamburg-Harburg)
• Brunner, A., Decressin, J. / Hardy, D. / Kudela, B. (2004): Germany’s Three-Pillar Banking System – Cross-Country Perspectives in Europe, Occasional Paper, International Monetary Fund, Washington DC 2004.
• Khambata, D. 1996 "The Practice of Multinational Banking: Macro-policy Issues and Key International Concepts", Quorum Books, London