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Commercial banking or business accounts are often more expensive than traditional bank accounts. Banks may charge fees for night deposits, for processing a certain number of checks and for the Payroll Services. Depending on the size of your business, some of the services offered may not be needed, and you may still be charged for the services even if you're not fully using them. Different banks may offer different services and charge different fees, and it can be difficult to compare the services. Signing up for a commercial account before your business is ready for one will cost you and may slow the growth of the business. If you choose the wrong bank, you may have a difficult time opening a new account and transferring all of the services to another bank. This can cost you both time and money.

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11y ago
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10y ago

While merchant banks were the primary banking institutions, they do come with a few disadvantages. The main disadvantage is the bank can invest in specific companies, while advising others on equity trades and portfolio management.

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11y ago

what are the

problems

that commercial banks

face

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Wiki User

12y ago

1.available for short period and renewal is uncertain or difficult

2.difficult terms & conditions imposed.

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Q: Disadvantages of merchant banking
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The problem with merchant banking is not allowing youthful professionals into the merchant banking business. Even though merchant banking is vast it needs more acceptable expertise to provide more services.


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Merchant Banking refers to negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies. A bank that offers these services is called a merchant bank. Both commercial and investment banks may engage in merchant banking activities. The original purpose of merchant banks was to facilitate and/or finance production and trade of commodities and hence the name "merchant"


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Merchant Banking refers to negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies. A bank that offers these services is called a merchant bank. Both commercial and investment banks may engage in merchant banking activities. The original purpose of merchant banks was to facilitate and/or finance production and trade of commodities and hence the name "merchant"


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Distinguish between commercial banking and merchant banking?

Merchant Banking refers to negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies. A bank that offers these services is called a merchant bank. Both commercial and investment banks may engage in merchant banking activities. The original purpose of merchant banks was to facilitate and/or finance production and trade of commodities and hence the name "merchant" Commercial banks are the normal banks that provide day to day banking services like checking/saving accounts, fixed deposits, loans etc.


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An example of merchant banking is where a multinational corporation, say ABC is considering to purchase a smaller company in a foreign country, company ABC will seek the services of a merchant bank to advise it on the acquisition process.