Depository Institutions of Financial Institutions
In the financial market, there are many types of financial institutions or intermediaries exist for the flow of funds. Some of them involve in depositary type of transactions whereas other involve in non-depositary type of transactions.
Depository Institutions is a financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. The depository types of financial institutions include banks, credit unions, saving and loan associations and mutual saving banks
- Commercial banks
Commercial banks are those financial institutions, which help in pooling the savings of surplus units and arrange their productive uses. They’re for-profit corporations that are usually owned by private investors. They basically accept the deposits from individuals and institutions, which are repayable on demand. These deposits from individuals and institutions are invested to satisfy the short-term financing requirement of business and industry. They often offer a wide range of services to consumers and corporations around the world.
- Credit Unions
Credit unions are cooperative associations where large numbers of people are voluntarily associated with savings and borrowing purposes. These individuals are the members of credit unions as they make share investment along with deposits. The earnings of that credit union are distributed to everyone who has an account in the form of dividends. The saving generated from these members are used to lend the members of the union only.
- Saving And Loan Associations
Saving and loan associations are the financial institutions involved in collecting funds from many small savers and lending these funds to home buyers and other types of borrowers. Sometimes savings institutions are designed as corporations; other times they’re set up as mutual cooperatives, wherein depositing cash into an account buys you a share of ownership in the institution.
- Mutual Saving Banks
Mutual saving banks are more or less similar to saving and loan associations. They primarily accepts savings of individuals and they are lent to the home users and consumers on a long-term basis.