Literature Review

Bank - A bank is a financial institution licensed to receive deposits and make loans. Banks may
also provide financial services, such as wealth management, currency exchange, and safe deposit
boxes. There are two types of banks: commercial/retail banks and investment banks. In most
countries, banks are regulated by the national government or central bank. (Investopedia, 2018)

Investment Bank - Investment banking is a category of financial services that specializes

primarily in selling securities and underwriting the issuance of new equity shares to help
companies raise capital. Investment banking is different from commercial banking, which
specializes in deposits and commercial loans. (answers, 2019)

Role of Investment Banks - Investment bankers help their clients raise money in capital markets
by issuing debt or selling equity in the companies. Other job duties include assisting clients with
mergers and acquisitions (M&As) and advising them on unique investment opportunities such as
derivatives. (Investopedia, 2018)

Commercial Bank - A commercial bank is a financial institution which performs the functions
of accepting deposits from the general public and giving loans for investment with the aim of
earning profit. ... They generally finance trade and commerce with short-term loans. (Singh,
2018)

Merchant Bank - A merchant bank is a company that conducts underwriting, loan services,
financial advising, and fundraising services for large corporations and high net worth individuals.
Unlike retail or commercial banks, merchant banks do not provide services to the general public.
They do not provide regular banking services like checking accounts and do not take deposits
Investment Banking vs. Commercial Banking

The main difference between investment banking and commercial banking is that investment
banking typically deals with purchasing and selling bonds and stocks for companies, and also
helping them issue IPOs, while commercial banks primarily deal with deposits or loans for
companies or individuals.

So, basically, investment banks deal with trading securities, whereas commercial banks do not.

However, there are still several other key differences between investment banking and
commercial banking that have to do with regulation, risk level, and benefits. (answers, 2019)

Merchant Banking vs. Investment Banking

BASIS FOR
MERCHANT BANK INVESTMENT BANK
COMPARISON

Meaning Merchant Bank implies a banking
institution, that fulfills capital
requirements of the companies in
the form of share ownership, rather
than granting loans.
Investment Banks are the middleman
between the issuer of securities and
the investing public, and also
provides various financial services to
the clients.

Deals with International financing activities Underwriting and issuance of

securities

Based on Fee based Fee based and fund based

Trade financing Offered to the clients Rarely provided

Deals with Small companies Large companies

(S, 2018)