What are the advantages and disadvantages of commercial banks compared with other banks?

Commercial banks, abbreviated as CB in English, have a popular network homonym "save it", which means storage bank. The concept of commercial banks is different from that of central banks and investment banks. It is a financial institution with profit as its function, raising funds with various financial liabilities and operating with various financial assets. General commercial banks have no right to issue currency. Traditional commercial banks mainly focus on deposit and loan (borrowing) business, that is, borrowing deposits at lower interest rates and lending loans at higher interest rates. The deposit-loan spread is the main profit of commercial banks. The main business scope of commercial banks includes absorbing deposits from the public, enterprises and institutions, issuing loans, discounting bills and intermediary business. It is a savings institution, not an investment institution.

superiority

First of all, it can limit the merger and monopoly of the banking industry, which is conducive to free competition; Secondly, it is conducive to coordinating the relationship between banks and local governments and making banks better serve regional economic development; In addition, because the single banking system is full of independence and autonomy, with few internal levels, its business operation is more flexible and easy to manage.

disadvantaged

First of all, a single bank has a small scale and high operating costs, making it difficult to achieve economies of scale; Second, there is an artificial contradiction between the single banking system and the outward development of the economy.

The circuitous flow of capital weakens the competitiveness of banks; Thirdly, the business of a single bank is relatively concentrated and risky. With the popularization and application of electronic computers, a single system restricts the development of banking business and financial innovation.

The disadvantages are becoming more and more obvious.