What is a commercial bank?

Commercial Bank, abbreviated as CB in English, is a kind of bank, whose duty is to act as a credit intermediary for financial institutions through deposits, loans, remittances and savings. The main business scope is to absorb public deposits, issue loans and discount bills. General commercial banks have no right to issue money, while traditional commercial banks mainly focus on deposits and loans.

Judging from the development of commercial banks, commercial banks have two business models. One is the British model. Commercial banks mainly finance short-term commercial funds, which have the characteristics of short lending period and high liquidity.

That is, borrowing deposits at a lower interest rate and lending them at a higher interest rate. The deposit-loan spread is the main profit of commercial banks. This business model is relatively safe and reliable for banks. The other one is from Germany, and its business is comprehensive. Commercial banks not only finance short-term commercial funds, but also finance long-term fixed capital, that is, engage in investment banking business.

References:

Baidu encyclopedia-commercial bank