Commercial bank

A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit.

It can also refer to a bank or a division of a large bank that deals with corporations or large or middle-sized businesses, to differentiate from retail banks and investment banks. Commercial banks include private sector banks and public sector banks. However, it's important to note that central banks function differently from commercial banks, despite a common misconception known as the "bank analogy". Unlike commercial banks, central banks are not primarily focused on generating profits and cannot become insolvent in the same way as commercial banks in a fiat currency system.^[1]

^ Diessner, Sebastian (2023). "The power of folk ideas in economic policy and the central bank-commercial bank analogy". New Political Economy. 28 (2): 315–328.

[1] Diessner, Sebastian (2023). "The power of folk ideas in economic policy and the central bank-commercial bank analogy". New Political Economy. 28 (2): 315–328.

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