Introduction to Business

Commercial banks

 Commercial bank provides array of services to individuals and businesses. They offer serves such as receiving, transferring money and provides security to customers. Individuals and businesses receive loans which they use in business operations and this increases the rate of deposits. Commercial banks also offer services to nations where they issues debit cards and creates wire transfer (Harker, 2000).  Banks acts as commercial transactions and provides merchants with checks and credit cards.  Profit is generated through charging higher interest rates and offering services such as electronic banking.

Savings and loan associations

 These financial institutions offer dividends to depositors and the amount offered is measured by the amount of savings. It also takes stock savings for profit making. Since these institutions are mutually owned, they offer lower rates of loans and higher interest for the purpose of making profits.  It mainly concentrates on deposits and mortgage loans and individuals and business are allowed to participate in making the managerial goals (Harker, 2000). They also act like bank-like institution by offering mutual funds and loans. Services in these institutions are similar with banks since customers are provided with similar financial services. However, a notable difference is seen on the spores of money since thrifts can obtain funds from public savings.

 

 

Credit unions

Credit unions lend funds with lower rates and charges high rates on deposits. There is restriction on membership where only members of a specific group such as religions and community organizations are allowed to participate in a credit union (Harker, 2000). The deposits of the members are a partial ownership and so only members are allowed to deposit and receive loans. Members use their shares to provide loans and accept deposits and income received is used for project development.  These differ from banks since their financial operations are for non-for-profit (Harker, 2000).

Non-deposit institutions

 These institutions acts as financial intermediaries which do not take deposits but they generate money through selling services. They do not offer direct banking but they promote financial system through mutual funds, pension finance, investment and more (Harker, 2000).  

 

Reference

Harker, P. T. (2000). Performance of financial institutions: Efficiency, innovation, regulation.

Cambridge [u.a.: Cambridge Univ. Press.