Knowra Commercial banking Commercial banking Commercial banking is the provision of deposit, lending, payment, and related financial services to households and businesses. Banks connect savers with borrowers while facilitating everyday transactions.
Fractional-reserve banking : A banking system in which deposits fund loans while banks retain reserves to meet withdrawals and payments. Deposit-funded lending links customer accounts to the bank’s credit creation.
Demand deposit : A bank deposit that can be withdrawn or transferred on demand, commonly through a checking account. It is the everyday transaction balance commercial banks provide to customers.
Retail banking : Banking services provided primarily to individuals and households, including deposits, cards, and personal loans. It is the household-facing part of commercial banking.
Investment banking : Financial services that help organizations raise capital, conduct mergers, and trade or underwrite securities. It focuses on capital markets and transactions rather than routine deposits and loans.
Deposit insurance : A guarantee that protects eligible bank deposits up to specified limits if an insured institution fails. It helps prevent depositor losses and reduce panic-driven withdrawals.
Bank reserves : Cash and balances held by a bank to meet payments, withdrawals, and regulatory requirements. Reserves let commercial banks settle payments and handle customers’ withdrawals.
Savings account : A deposit account designed to hold funds and usually pay interest, subject to its terms and regulations. Savings accounts supply relatively stable customer funding and a place to store cash.
Business banking : Banking services for small and medium-sized businesses, including accounts, payments, credit, and cash management. It adapts commercial banking products to firms’ operating and financing needs.
Central bank : A public institution that manages monetary policy, issues currency, and supports the stability of a financial system. Central banks oversee monetary conditions; commercial banks serve customers and extend credit.
Bank regulation : Rules and supervisory practices governing banks’ safety, conduct, and financial reporting. Regulation constrains risk-taking and sets standards for commercial banks.
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