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Business Glossary


Business Definition for: universal banking
universal banking

banking system in several European countries where commercial banks make loans, underwrite corporate debt, and also take equity positions in corporate securities. For example, in Germany commercial banks accept time deposits, lend money, underwrite corporate stocks, and act as investment advisors to large corporations. In Germany, there has never been any separation between commercial banks and investment banks, as there is in the United States.

The advantages of this type of banking system have been debated. Universal banking permits better use of customer information and allows banks to sell more services under one roof as a financial supermarket . The main disadvantage is that universal banking permits concentration of economic power in a handful of large banking institutions that hold equity positions in companies that are also borrowers of funds.

Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.


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