Banking

A bank is a depository financial institution or a financial institution that accepts deposits and channels the money into lending activities.  A bank is an organization, typically a corporation, chartered by a state or federal government.  This institution performs most if not all of the following services, receives cash in the form of deposits and time deposits, honors notes drawn against them, and pays interest on cash held for customers.  They also hold discounts notes, make loans, and invest in securities.  In addition, banks collect checks, drafts, and notes; they certify depositor’s checks, and issues drafts and cashier’s checks.  Banks perform vital and necessary functions in our economy.  They make it possible for us make payments and withdraw money when we need to and they do it seamlessly and efficiently. 

Investment banks can be an institution or individual that acts as an underwriter or agent for corporations or municipalities issuing securities.  In addition, most maintain broker/dealer operations, offer advisory services to investors, and maintain markets for previously issued securities.  This type of bank also plays a big role in private equity placements, facilitating mergers and acquisitions, and corporate restructuring.  Investment banks do not allow deposits from customers nor do they provide loans to individuals.

Commercial bank is a financial institution that accepts deposits, makes business loans, and offers related financial services.  Commercial banks also provide various types deposit accounts, like checking, savings, and time deposit.  Commercial banks are managed to make a profit and typically owned by a group of individuals, nevertheless some may be members of the Federal Reserve System.  The primary function of commercial banks is with receiving deposits and lending to businesses.