What is an Investment Bank and how is it different from a Commercial Bank?
Investment banking refers to the segment of banking that includes the entire gamut of activities associated with helping companies and other entities acquire funds, make investments and carry out certain transactions. Traditionally, banks were either commercial banks or investment banks. In fact, it was illegal for a bank in the US to offer both commercial banking and investment banking services. That changed on November 12, 1999, when the Gramm-Leach-Bliley Act allowed the consolidation of commercial and investment banks. Several banks opted to widen their horizon. For instance, Citigroup as we know it today would not have existed had it not been for this Act. Today, investment banks play an important role in shaping the global financial industry. But how are the activities of investment banks different from those of commercial banks? Commercial banks provide deposit and loan services through their wide branch networks and thousands of ATMs spread across the globe. If you are looking
