1. CHAPTER 25 FINANICAL INSTITUTIONS AND BANKING SERVICES. Mr. Calkins
CHAPTER 25 FINANICAL INSTITUTIONS AND BANKING SERVICES Mr. Calkins Spring 2008

2. THE BANKING SYSTEM & FINANICAL SERVICES

3. THE BANKING SYSTEM & FINANICAL SERVICES
The Business of Banking
Most people don’t think of banking as a business. Yet a bank is a business just like stores and factories. For their services banks earn most of their revenue by charging interest for loans. However just because a bank is a business not just anyone can start one!

4. THE BANKING SYSTEM & FINANICAL SERVICES
BANKS & OTHER DEPOSIT-TYPE INSTITUIONS
COMMERICAL BANK
SAVINGS & LOAN
MUTUAL SAVINGS
CREDIT UNIONS

5. THE BANKING SYSTEM & FINANICAL SERVICES
COMMERCIAL BANK
Commercial Banks are often called full-service banks because they offer a wide range of financial services such as:
Savings Accounts
Checking Accounts
Loans (Individuals)
Loans (Businesses)

6. THE BANKING SYSTEM & FINANICAL SERVICES
SAVINGS & LOANS
Savings & Loan Association
Specialize in “Savings Accounts”
Home Mortgage
In recent years these organizations have expanded out in to the other aspects of banking as well.

7. THE BANKING SYSTEM & FINANICAL SERVICES
MUTUAL SAVINGS BANKS
A mutual savings bank provides a variety of services. It is however organized almost exclusively for savings purposes. This type of financial institution is owned by the depositors. All profits of the business go back to the depositors. Most of these types of banks are located in the Northeast United States.

8. THE BANKING SYSTEM & FINANICAL SERVICES
CREDIT UNIONS
This is a “user” owned and “non-profit “financial institution. These are normally formed for people who work in the same company. Such as government agency, unions, school districts etc.

9. THE BANKING SYSTEM & FINANICAL SERVICES
CREDIT UNIONS OFFER THE FOLLOWING”
SPECIALIZED CHECKING ACCOUNTS
CREDIT CARDS
MORTGAGES
HOME EQUITY LOANS
SAFE=DEPOSIT BOXES
INVESTMENT SERVICES
ELECTRONIC BANKING SERVICES
PROVIDE LOANS TO SMALL BUSINESSES

10. THE BANKING SYSTEM & FINANICAL SERVICES
NON—DEPOSIT -TYPE INSTITUIONS
LIFE INSURANCE COMPANIES
INVESTMENT COMPANIES
CONSUMER FINANCE COMPANIES
MORTGAGE COMPANIES
CHECK-CASHING OUTLETS
PAWNSHOPS

11. THE BANKING SYSTEM & FINANICAL SERVICES LIFE INSURANCE COMPANIES
People buy life insurance to provide $$$security for their loved ones. Many life insurance companies also offer other financial services.

12. THE BANKING SYSTEM & FINANICAL SERVICES
INVESTMENT COMPANIES
Investment companies allow people to choose investment opportunities for long-term growth of their money.

13. THE BANKING SYSTEM & FINANICAL SERVICES
CONSUMER FINANCE COMPANIES
These companies specialize in making loans for long-lasting or durable goods, such as cars and refrigerator, and for financial emergencies.

14. THE BANKING SYSTEM & FINANICAL SERVICES
MORTGAGE COMPANIES
These companies provide loans for people to purchase homes or other alternative types of real estate.

15. THE BANKING SYSTEM & FINANICAL SERVICES
CHECK-CASHING OUTLET
These financial institutions are for people who don’t have checking/savings accounts. They offer a wide variety of services such as: Mailing, Selling stamps, money orders, file taxes, and private postal boxes.

16. THE BANKING SYSTEM & FINANICAL SERVICES
PAWNSHOPS
These stores make loans off of personal merchandise. These items include but are not limited to: TV’s, Computers, Jewelry, Musician Equipment and Guns. These are very high interest loans and usually a last option for folks.

17. THE BANKING SYSTEM & FINANICAL SERVICES
TYPES OF FINANCIAL SERVICES
***Accepting Deposits
***Transferring Funds
***Lending Money
***Storing Valuables
***Providing Financial Advice
***Managing Trusts

18. THE BANKING SYSTEM & FINANICAL SERVICES
ACCEPTING DEPOSITS
Safe storage of $$$ for use in the future is a universal need. One of the main services financial institutions offer is accepting money from their for their safekeeping.

19. THE BANKING SYSTEM & FINANICAL SERVICES
TRANSFERRING FUNDS
The ability to transfer funds from one account to another are a significant service that banks provide. The most common method of transfer is by someone writing a check. EFT or Electronic Funds Transfer is becoming more and more the wave of the future in $$ transactions. You can have your bank transfer things automatically from your bank account to pay utilities bills and make loan payments.

20. THE BANKING SYSTEM & FINANICAL SERVICES
LENDING MONEY
One of the ways that banks can increase loans (quantity) is by offering credit cards. Buying items such as clothing, sports equipment, jewelry many times are purchased by credit cards. This allows one to make a purchase without the long legality of a loan. However you do pay a higher interest rate for the conveneince of such a loan arrangement.

21. THE BANKING SYSTEM & FINANICAL SERVICES
STORING VALUABLES
Another type of service offered is a place to store valuables. This can be important paperwork, stocks, bonds, COD’s, jewelry and family mementos etc. These are usually kept in a high security well-guarded vault. This “safe deposit” box may only be opened by the person who initiated the contract or if you allowed someone to have access via your signature on a card.

22. THE BANKING SYSTEM & FINANICAL SERVICES
FINANCIAL ADVICE
Banks advice customers on a number of different financial items. Banks offer advice on investments. Some of these include: Saving accounts that earn interest, Government bond, Bonds issued by local governments and school districts etc.

23. THE BANKING SYSTEM & FINANICAL SERVICES
MANAGING TRUSTS
Trust companies are businesses that manage people’s money and property for them. These are usually put in place by people both “young & old” who come into money or gaining an inheritance. Elderly people who are ill or incapacitated use trust companies to manage their finances.

24. THE BANKING SYSTEM & FINANICAL SERVICES
FEDERAL RESERVE SYSTEM
The federal government set up the Federal Reserve System to supervise and regulate banks and financial institutions. The U.S. is divided into 12 Federal Reserve Districts. There is a Central Reserve Bank in each district.

25. THE BANKING SYSTEM & FINANICAL SERVICES
FEDERAL RESERVE ACTIVITIES
The federal reserve system serves its member banks much like your bank serves you. It accepts deposits, lends money, and provides them with other banking services. FRS sees to it that banks don’t lend out all the monies they receive from customers. They are only allowed to lend a certain percentage of the $$$ they take in. FRS sees to it that these rules are followed.