|
Institution
|
|
Description
|
|
|
|
Commercial bank
|
|
Accepts both demand (checking) and time (savings) deposits. Also offers negotiable order of withdrawal (NOW) accounts, which are interest-earning savings accounts against which checks can be written, and money market deposit accounts. Makes loans directly to borrowers or through the financial markets.
|
|
Savings and loan
|
|
Similar to a commercial bank, except that it may not hold demand (checking) deposits. Obtains funds from savings, NOW, and money market deposit accounts. Lends funds primarily to individuals and businesses for real estate mortgage loans.
|
|
Credit union
|
|
Deals primarily in transfer of funds between consumers. Membership is generally based on some common bond, such as working for a given employer. Accepts members' savings deposits, NOW account deposits, and money market deposit accounts. Lends funds to other members, typically to finance automobile or appliance purchases or home improvements.
|
|
Savings bank
|
|
Similar to a savings and loan in that it holds savings, NOW, and money market deposit accounts. Generally lends or invests funds through financial markets, although some mortgage loans are made to individuals. Located primarily in the Northeast.
|
|
Life insurance company
|
|
The largest type of financial intermediary handing individual savings. Receives premium payments and invests them to accumulate funds to cover future benefit payments. Lends funds to individuals, businesses, and governments, typically through the financial markets.
|
|
Pension fund
|
|
Set up so that employees can receive income after retirement. Often employers match the contributions of their employees. The majority of funds is lent or invested via the financial markets.
|
|
Mutual fund
|
|
Pools funds from the sale of shares and uses them to acquire bonds and stocks of business and governmental units. Creates a professionally managed portfolio of securities to achieve a specified investment objective, such as liquidity with a high return. Hundreds of funds, with a variety of investment objectives, exist. Money market mutual funds provide competitive returns with very high liquidity.
|
