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ECON MACRO

5th Edition
William A. McEachern
ISBN: 9781337000529

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BuyFindarrow_forward

ECON MACRO

5th Edition
William A. McEachern
ISBN: 9781337000529
Textbook Problem

What is a depository institution, and what types of depository institutions are found in the United States? How do they act as intermediaries between savers and borrowers? Why do they play this role?

To determine

A depository institution and its types. Role of depository institution, as intermediaries between savers and borrowers.

Concept Introduction:

Depository institutions are bank, building society, credit union, or other financial institution that solicits and accepts savings of the general public as demand deposits or time deposits, and pays a fixed or variable rate of interest.

Explanation

Depository institutions are financial institutions that obtain funds mainly by accepting deposits from the public—both businesses and households. There are four major types of depository institutions: commercial banks, savings and loan associations, savings banks, and credit unions. Commercial banks are depository institutions that accept deposits, issue check-writing accounts, and make loans to businesses and individuals, collect deposits from individuals and lend these pooled deposits to individuals, businesses, and government units. Thrift institutions are noncommercial bank depository institutions (savings and loan associations, savings banks, and credit unions) that accumulate individual savings and lend primarily to other individuals. A savings bank accepts the savings of individuals and lends pooled savings to individuals primarily in the form of mortgage loans...

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