Commercial banking and investment banking
combined together is referred to as mixed banking. These two types of banking
are completely different from each other. Commercial banks are engaged in
short-term financing while investment banks are engaged in log-term financing.
Commercial banks’ deposits are of short duration and payable on demand or short
notice.
So these banks are to keep their assets as liquid as possible. While
lending commercial banks are to match their assets and liabilities in terms of
liquidity. Any mismatch may lead such banks into great trouble. On the other
hand, investment bankers lend for meeting the long term need of the business
and industry. That is why these banks are to procure resources of longer
duration to avoid liquidity crisis.