Comparison between Commercial and Merchant Banks:

The activities and functions of commercial and merchant banks in a typical developing economy can be compared and contrasted as follow:

i. Commercial banks are retail bankers accepting deposit from individuals businesses and government, not considering the size. On the other hand, merchant bankers accepting deposit mostly from corporate bodies not below a specified minimum.

ii. Commercial banks grant more of short-term loans and advances to their customers. Merchant banks, on the other hand, grant medium and long- term loans and advances.

iii. Commercial banks operate with wider branch network, while merchant banks, as wholesale bankers, operate with limited branch network.

iv. Commercial banks offer more of general banking services such as deposit taking and granting of loans and advances. Merchant banks offer mostly specialized banking services such as equipment leasing debt factoring, project financing, etc.

v. Both commercial and merchant banks facilitate foreign trade by providing for their customers facilities for establishing letters of credit with overseas trading partners. Both also provide bill of exchange facility.