What type of institution is a commercial bank?

A commercial bank is classified as a for-profit institution that provides a comprehensive array of financial services to individuals, businesses, and government entities. This includes services such as accepting deposits, offering checking and savings accounts, providing loans, and facilitating investments. The primary goal of a commercial bank is to generate profit for its shareholders through the interest earned on loans and various fees for services rendered.

The nature of commercial banks is rooted in the profit motive, distinguishing their operations from those of nonprofit organizations or community-focused entities. They not only serve a wide customer base but also actively seek to maximize financial returns, which is why they are established as for-profit institutions. Their ability to offer diverse services makes them integral players in the financial system, contributing to economic activity by managing money, facilitating transactions, and providing credit.