Question

Explain the primary use of funds by commercial banks versus savings institutions?

Answer 1

Commercial banks act as surplus provider by offering array of deposit accounts, & they transfer funds(deposited) to deficit units through direct loans/purchasing debt securities.

Savings institutions: savings & ban associations (S&L) & savings banks. They are mostly owned by depositor or mutually owned though they can be owened by shareholders . Similar to commercial banks, they have deposit accounts from surplus units & then channel deposits to deficit units