How is a commercial bank different from a savings and loan association?
What will be an ideal response?
A commercial bank differs from a savings and loan association primarily in the type of loans each is allowed to make. Savings and loan associations were originally established to act as lending institutions for home buyers. Thus, most of their assets were mortgages. Commercial banks, on the other hand, dealt with business loans and short-term consumer and installment loans. Banks were allowed to have checking accounts whereas S&Ls were not. Today, the difference between the two institutions is blurred as S&Ls offer check able deposits and make short-term consumer loans. They still exist primarily to make home mortgage loans. Commercial banks are still the major source of business short-term borrowed funds and offer commercial checking accounts. While banks do make some long-term home loans, they are still primarily associated with business lending and short-term consumer loans.
You might also like to view...
International trade has the potential to ____ the availability of goods and services to ____
a. increase; those nations who export more than they import b. increase; nations that have an absolute advantage in the production of a good or service c. increase; all nations d. decrease; all nations
Suppose we were analyzing the Turkish lira per euro foreign exchange market. If The Euro-Area's risk level falls relative to Turkey and nothing else changes, then the:
a. The supply of euros in the foreign exchange market falls, and the demand for euros in the foreign exchange market rises, causing an appreciation of the euro. b. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing an appreciation of the euro. c. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market rises, causing an uncertain change in the value of the euro. d. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing a depreciation of the euro. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.