Commercial banks 

are typically defined as institutions that make commercial loans and

issue transactions deposits. They also have many other types of assets and liabilities

and may engage in off-balance sheet activities, including financial guarantees (like loan

commitments) and derivatives. They are unique among financial institutions in having

significant off-balance sheet activities, although most of these activities are

concentrated in the largest commercial banks. Commercial banks are highly regulated.

[CITATION All16 \l 13321 ]

Commercial banks, like private banks, were both accepting deposits and engaging in

the functions of investment banking. After the Glass–Steagall Act was passed,

investment banking functions that a commercial bank could perform were substantially

reduced and their underwriting capacity was severely limited. They were only allowed to

underwrite or “agent” bond offerings for municipal, state, and federal government

bodies. Those banks that chose commercial banking over investment banking either

spun off their investment banking business (for example, J.P. Morgan & Co. decided to

operate as a commercial bank and spun off its investment banking arm to form Morgan

Stanley in 1935), or drastically cut staff. In addition, commercial banks were limited to

earning no more than 10% of total income from securities transactions, not including an

exemption for the underwriting of government-issued bonds.[CITATION Dav \l 13321 ]

Commercial banks are the largest source of liquidity to the commercial mortgage

market. They provide many types of mortgages to owners of multifamily properties,

income producing properties, owner-occupied properties, and construction loans.

The Federal Reserve Board shows commercial banks having $1,500 billion of

commercial mortgages as of 2011 Q2. Over one-third of the bank lending, $576 billion is

on income-producing commercial properties, $216 billion is on multifamily properties,

$484 billion is on owner-occupied commercial real estate, and there are $256 billion of

construction loans.[CITATION Edw \l 13321 ]

According to The General Banking Act of the Philippines, a commercial banking

corporation shall be any corporation which accepts or creates demand deposits subject

to withdrawal by check.

A commercial banking corporation, in addition to the general powers incident to

corporations, shall have all such powers as shall be necessary to carry on the business

of commercial banking, by accepting drafts and issuing letters of credit, by discounting

and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt;

by receiving deposits; by buying and selling foreign exchange and gold or silver bullion,

and by lending money against personal security or against securities consisting of

personal property or first mortgages or improved real estate and the insured

improvements thereon. No loan on the security of real estate shall have a maturity in

excess of fifteen years but the aggregate of such loans on real estate security shall not

exceed seventy per cent (70%) of the total savings deposits of the bank.

Commercial banks may acquire high-grade bonds and other evidences of indebtedness.

Except in exceptional circumstances, however, the Monetary Board shall not permit

commercial banks to invest in securities having maturities greater than three years from
the date of acquisition by the bank an amount in excess of twenty per cent (20%) of its

total deposits.

The term commercial bank refers to a financial institution that accepts deposits, offers

checking account services, makes various loans, and offers basic financial products like

certificates of deposit (CDs) and savings accounts to individuals and small businesses.

A commercial bank is where most people do their banking.

Commercial banks make money by providing and earning interest from loans such as

mortgages, auto loans, business loans, and personal loans. Customer deposits provide

banks with the capital to make these loans.[CITATION Kag \l 13321 ]

Bibliography
Berger A.N. and Bouwman C.H.S. (2016). Bank Liquidity Creation and Financial Crises.

Glickman, E. A. (2014). An Introduction to Real Estate Finance.

Kagan, J. (2021, February 21). Commercial Bank. Retrieved from Investopedia:

https://www.investopedia.com/terms/c/commercialbank.asp

Stowell, D. P. (2018). Investment Banks, Hedge Funds, and Private Equity (Third Edition).