What are the differences between investment banks and commercial banks

1) The business subjects are different.

Investment banks take the underwriting business as the core, while commercial banks take the deposit and loan business as the core.

The business of investment banking is extremely broad, including the primary market and secondary market, as well as project finance, corporate finance, asset management, mergers and acquisitions, assetization, venture capital, consulting services and financial instrument innovation.

The business of commercial banks can basically be divided into three categories, namely, liability business, asset business and intermediate business.

2) The financing system is different.

An investment bank is a financial intermediary in the capital market, while a commercial bank is a financial intermediary in the money market or lending market.

The investment bank does not intervene in the rights and obligations between the investor and the fundraiser, but only receives a commission, and the investor and the fundraiser directly have the corresponding rights and obligations (direct financing). Commercial banks are different, and commercial banks have the dual identity of both a demand for funds and a supplier of funds (indirect financing) in financing activities.

3) The composition of profits is different.

Investment banks mainly earn commission income, while commercial banks mainly earn income from deposit and loan spreads.

Commission: primary market, secondary market.

Income from capital operations: investment income and other income.

Interest Income: Includes both interest income from mortgage loans and interest income from margin margins.

Deposit and loan spreads.

Income from capital operations.

Intermediate business and off-balance sheet income.

From the point of view of the ranking of their profits, the basic income of commercial banks is the spread between deposits and loans, although commercial banks also have other incomes in profits, but their proportion is often low.

1. From the perspective of market positioning, banks are the core of the money market, and investment banks are the core of the capital market;

2. From the perspective of service functions, commercial banks serve indirect financing, while investment banks serve direct financing;

3. From the perspective of business content, the business focus of commercial banks is to absorb deposits and issue loans, while investment banks do not absorb all kinds of deposits or issue loans to enterprises, and the business focus is underwriting, corporate mergers and acquisitions and asset restructuring;

4. From the perspective of income, the income of commercial banks is mainly based on the spread between deposits and loans, while the income of investment banks is mainly based on the handling fees or commissions in underwriting, corporate mergers and acquisitions and asset restructuring business.

The difference between investment banking and commercial banking is that the definition is different, the service object is different, and the service scope is different. Investment banking is the name given to the United States and continental Europe, and is the leading company in China.

Mainly engaged in ** issuance, underwriting, trading, corporate restructuring, mergers and acquisitions and other activities, focusing on the primary market underwriting business, mergers and acquisitions and financing business of financial advisors. Commercial banks are a type of banks, established by the state, and their responsibilities are to provide financial services to commercial banks in many aspects through deposits, loans, exchanges, savings and other businesses.

Investment banks are mainly non-bank financial institutions engaged in issuance, underwriting, trading, corporate restructuring, mergers and acquisitions, investment analysis, venture capital, project financing and other businesses, and are the main financial intermediaries in the capital market. Investment banks are the name given to the United States and continental Europe, the United Kingdom to call them merchant banks, and in China and Japan to refer to ** companies. There are four main organizational forms of investment banks:

The first is an independent professional investment bank, there are many institutions of this type, all over the world, they have their own business directions, such as China's CITIC**, CICC, the United States Goldman Sachs, Morgan Stanley.

There are two business models for commercial banks. One is the British model, in which commercial banks mainly finance short-term commercial funds, which have the characteristics of short lending term and high liquidity. That is, borrowing deposits at a lower interest rate and lending at a higher interest rate, the interest rate difference between deposits and loans is the main profit of commercial banks, and this business model is relatively safe and reliable for banks.

The other is the German type, and its business is integrated. Commercial banks not only finance short-term commercial funds, but also long-term fixed capital, that is, engage in investment banking business.

On the basis of the functions of credit intermediary and payment intermediation, commercial banks have created the function of credit creation. Commercial banks are banks that can absorb all kinds of deposits, and use the various deposits they absorb to issue loans, on the basis of check circulation and transfer settlement, loans are derived into deposits, and on the basis of such deposits do not withdraw cash or do not fully withdraw, the funds of commercial banks are increased, and finally in the entire banking system, the derivative deposits are formed several times that are the initial deposits.

1. Different service objects: investment banks mainly serve the capital market, which is a sign that distinguishes commercial banks. The business objects of commercial banks are not ordinary commodities, but money and capital.

2. The scope is different: The scope of commercial banking business activities is not in the field of production and circulation, but in the field of money and credit. The business scope of investment banks is issuance underwriting risk, brokerage business risk, proprietary business risk, and market maker business risk.

3. Particularity is different: As a special bank, commercial banks are different from first-class banks and policy-based financial institutions in terms of business nature and business objectives. It is for the purpose of profit, and emphasizes the principles of profit-making, safety and liquidity in the process of operation, and is not subject to administrative interference.

Investment banks are the main financial intermediaries in the capital market and are subject to ** intervention.