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According to some, banks and investment banks are different things. But at the end of the day it seems an investment bank & a bank are both still one in the same, intermediary node in the flow of capital where fees are taken.

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  • It's not "according to some". They are two completely different things. – Michael Hartmann Feb 1 '18 at 23:33
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They provide entirely different services and serve entirely different markets.

Commercial banks take in deposits and provide loans. Chase is an example of a commercial bank.

Investment banks do not take deposits, and if they provide a loan it is from their own money, not depositors'. They make money by providing financial services for which they are paid -- underwriting an IPO, handling a merger or acquisition, handling trading, etc. Goldman Sachs is an example of an investment bank.

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A motorcycle and a pickup truck are both wheeled vehicles that will take you to your destination. But they are very different if you want to move a wardrobe.

Retail banks are the ones we rely on to actually transfer money between people and businesses. They are typically heavily regulated in terms of loans to deposits ratios, the percentage of risky loans they're allowed to hold, and so on. In the USA, deposits with such banks are often insured by the FDIC.

Investment banks are free from most of those regulations. They can, and do, go bankrupt when their risky investments go bad. The separation of retail and investment banking is supposed to prevent such a failure impacting the retail banking sector.

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