Difference Between Merchant Bank And Investment Bank

Difference Between Merchant Bank And Investment Bank

The major dissimilarities or difference between merchant bank and investment bank can be pointed out as follows:

1. Introduction

Merchant Bank: Type of financial institution that provides underwriting and financing services to the companies internationally. 

Investment Bank: Type of financial institution that acts like a middleman between the company and investors which helps to raise adequate capital for the business company.

2. Functions

Merchant Bank: Underwriting, portfolio management, loan syndication, financing etc.

Investment Bank: Merger, acquisition, securities issue, underwriting etc.

3. Related To

Merchant Bank: It is related to the financing activities

Investment bank: It is related to underwriting and raising capital

4. Size Of Firms

Merchant Bank: Generally it deals with small and medium sized firms

Investment Bank: It deals with large sized public and private firms

5. Trade Financing

Merchant Bank: Yes

Investment Bank: No

   Also Read: 

Difference Between Commercial Bank And Merchant Bank

6. Worldwide Participation

Merchant Bank: Yes

Investment Bank: Rarely

7. Examples

Merchant Bank: Axis Bank, Citigroup etc.

Investment bank: Bank Of America, Rothschild etc.

Merchant Bank Vs Investment Bank (Comparison Chart)

Basis For Difference	Merchant Bank	Investment Bank
Introduction	Financial institution that deals with international trade and provides financing and underwriting services	Financial institution that helps the company to raise adequate capital
Functions	Underwriting, loan syndication, portfolio management etc.	Merger, acquisition, securities issue etc.
Concerned With	Financing	Raising capital and underwriting
Deals With	Small firms	Large firms
Trade Financing	Yes	Rarely
Examples	Axis Bank Citigroup etc.	Bank Of America, Rothschild etc.

I hope this post is helpful to understand the difference between merchant bank and investment bank and to make comparison between them.