Chapter 14.3, Problem 3R

To determine

To evaluate the advantage of allowing thrift institutions to offer the same services as commercial banks.

Explanation of Solution

Accepting deposits and even lending funds is the basic feature of a commercial bank. It also offers loans and advances, cash credits, overdrafts and bill discounts to its clients, etc. used to be the only financial institutions that could provide cash deposits. Today, all the treacherous institutions. Mutual savings banks, lending societies, and credit unions offer cash deposits. In addition, many brokerage firms offer the equivalent of audit accounts. Most of the money supply in the U.S. consists of a checkable account.

The partnership between the Thrifts Organization and the Commercial Banks is that the Thrifts frequently refer to joint savings banks and credit unions offering a variety of investment programmes and loans. Thrifts differ from business banks, since they may take funds from the Federal Home Loan Bank Program which allows participants to pay higher interest rates.

Economics Concept Introduction

Introduction: A thrift institution related to the financial institution that receives the bulk of its assets from public savings. The term may include multiple types of cooperative banking; savings and association loans. Such institution can retain most of their investments in mortgages and collect the rest of their loan deposits.