0The Depository Institutions comprises of all the commercial banks (or simply banks), savings and loan associations, saving banks and credit Unions. Thus all the financial intermediaries that accept deposits can be termed as Depository institutions. The savings and loan associations, saving banks and credit unions are commonly referred as the thrifts, which are specialized types of depository Institutions.
These Instituitons are highly regulated because of the important role that they play in the country’s financial system. Demand deposits accounts are the principal means that individuals and business entities use for making payments, and government monetary policy is implemented through the banking system. Hence, due to their important role, depository institutions are afforded special privileges such as access to federal deposit insurance and access to a government entity that provides funds for liquidity or emergency needs.
The Depository institutions derive income from the following two sources:
- The Income generated from the loans they make and the securities they purchase.
- The Fee income.
