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Civics and Economics Chapter 9 Lesson 3

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Bryan Poepperling

on 2 May 2014

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Transcript of Civics and Economics Chapter 9 Lesson 3

1. Commercial Bank

2. Mutual Savings Banks

3. Savings and Loans

4. Credit Unions
- The term "bank" is often used to refer to any type of financial institution
Ticket out of the Door
Types of Financial Institutions
Commercial Bank
Mutual Savings Banks
- The most common type of bank

- Owned by stockholders

Offer a wide range of services, including savings and checking accounts, loans, and investment services
- Owned by the depositors, or people who put their money in the bank and share in the profits

- These banks offer savings and checking accounts and make loans
CE. 12
Lesson 3: Banking Systems/ Private Financial Institutions
Mr. Poepperling
Financial Institutions
Savings and Loans / Credit Unions
Chapter 9: Operation of the
United States Economy

CE. 12c- The student will demonstrate knowledge of the structure and operation of the United States economy by explaining how financial institutions channel funds from savers to borrowers
Standards and Objectives
1. Name 4 different types of financial institutions
2. Explain how financial institutions pay savers, charge borrowers, and make a profit
3. Explain what interest is and how it affects those who use banks in the United States economic system

1. What services do banks provide to users?
2. What is interest and how does it affect borrowers and savers?
3. How do banks help money flow through the United States economy?

- Financial institutions play an important role in the flow of money through the economy

- Reasons Businesses need financial institutions:

- to borrow money and expand
- to save money or invest

- Reasons households needs financial institutions:
- to borrow money to buy a house or car
- to save their money or invest it

- Financial institutions act as a link between borrowers and savers
Credit Unions
Set up to accept savings deposits and make loans for buying land and homes

- They also offer checking accounts like banks
Savings and Loans Companies
- Nonprofit financial institutions

- Offer a wide range of services only to members
- Example; offer loans for buying a car
- Banks set aside individual's or business's money to save, and loan some of it out

Interest: payment made for the privilege of using someone else's money
Banks pay interest to those who deposit money in exchange for the ability to loan their money to others

- Borrowers pay interest to the bank for use of the loaned money
- Banks need to make a profit; they charge higher interest on loans than they pay to depositors
Interest from borrowers
= 6%
Interest from depositors
= 2%
Operating expenses
= 3%
- 3%

Full transcript