An investment bank is a financial institution that raises capital, trades in securities and manages corporate mergers and acquisitions. Investment banks profit from companies and governments by raising money through issuing and selling securities in capital markets (both equity, debt) and insuring bonds (e.g. selling credit default swaps), as well as providing advice on transactions such as mergers and acquisitions. A majority of investment banks offer strategic advisory services for mergers, acquisitions, divestiture or other financial services for clients, such as the trading of derivatives, fixed income, foreign exchange, commodity, and equity securities.

In terms of regulatory qualification, to perform these services in the United States, an adviser must be a licensed broker-dealer, and is subject to Securities & Exchange Commission (SEC) (FINRA) regulation. Until the late 1980s, the United States maintained a separation between investment banking and commercial banks. Other industrialized countries (including G7 countries) have not maintained this separation historically.

Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) was referred to as the "sell side".

Dealing with the pension funds, mutual funds, hedge funds, and the investing public who consumed the products and services of the sell-side in order to maximize their return on investment constitutes the "buy side". Many firms have buy and sell side components.

The last two major bulge bracket firms on Wall Street were Goldman Sachs and Morgan Stanley until both banks elected to convert to traditional banking institutions and be fully regulated by the Federal Reserve on September 22, 2008, as part of a response to the U.S. financial crisis. Banco Santander, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, UBS, and Wells Fargo are so-called universal banks rather than bulge-bracket investment banks, since they also accept deposits (though not all of them have U.S. branches).