International Journal of Accounting Research

Abstract

Should the Services Provided by Investment and Commercial Banks be Separated? If so, why?

Payal Chadha

This paper examines whether the services provided by the investment and commercial banks should be separated or not. Commercial banks are defined as banks whose business is to deposit-taking and making loans. An investment bank’s main business is securities underwriting, mergers and acquisitions advisory, asset management and securities trading. As of today, many commercial banks perform investment-banking services. The paper concludes that while some countries like Switzerland don’t prefer separating the services of investment and commercial banking as its beneficial for them, US and European countries like Greece need to separate their investment and commercial banking services by introducing more regulations to avoid further financial crisis like the Great Depression or Subprime crisis of 2007.