commercial bank

commercial bank

noun

Definition of COMMERCIAL BANK

: a bank organized chiefly to handle the everyday financial transactions of businesses (as through demand deposit accounts and short-term commercial loans)

First Known Use of COMMERCIAL BANK

1910

commercial bank

noun    (Concise Encyclopedia)

Bank that makes loans to businesses, consumers, and nonbusiness institutions. Early commercial banks were limited to accepting deposits of money or valuables for safekeeping and verifying coinage or exchanging one jurisdiction's coins for another's. By the 17th century most of the essentials of modern banking, including foreign exchange, the payment of interest, and the granting of loans, were in place. It became common for individuals and firms to exchange funds through bankers with a written draft, the precursor to the modern check. Because a commercial bank is required to hold only a fraction of its deposits as cash reserves, it can use some of the money deposited by its customers to extend loans. Commercial banks also offer a range of other services, including savings accounts, safe-deposit boxes, and trust services. See also bank; central bank; investment bank; savings bank.