Definition
A financial institution that accepts deposits from individuals and businesses and provides loans, checking accounts, savings accounts, and other basic financial services. Commercial banks operate for profit and are typically regulated by national banking authorities.
Why It Matters
Commercial banks are central to the modern financial system. They facilitate payments, extend credit, create money through lending, and support economic growth by financing households and businesses.
Example
When a small business takes out a loan from a bank to purchase new equipment, it is borrowing from a commercial bank.