What is the difference between a commercial bank and investment bank?

Commercial banks are depository institutions that work with businesses. They hold money, extend loans and provide specialty services like payment processing and payroll management. Investment banks help large companies raise and manage capital and are involved with transactions such as issuing shares of stock and overseeing mergers.

Are commercial banks regulated?

Commercial banks are highly regulated by federal authorities such as the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). Commercial banks are insured by the federal government to maintain protection for customer accounts and provide a certain level of security.

What is investment banking?

Investment banking is a part of the financial services sector whose primary customer base is smaller than commercial banking. Clients include pension funds, corporations, governments and other financial institutions.