THRIFT INSTITUTION

Thrifts are specialised depository institutions in the United States. Depository institutions comprise all financial intermediaries that accept deposits and offer medium-term loans, especially in the real estate sector. They include Saving & Loan Associations (S&Ls), Mutual Savings Banks, and Credit Unions. Traditionally, S&Ls accept deposits and make loans for house construction, house purchase, house improvement or refinancing. Most S&Ls are non-profit societies jointly owned by depositors in exchange for proportionate returns. Although by law S&Ls are not banks, in recent times the distinction between banks and S&Ls has almost totally disappeared and they are often considered as a part of the banking sector. In the UK, building societies are similar organisations. Mutual Savings Banks, like S&Ls, accept small deposits and typically offer a residential mortgage. They are owned by stockholders or by depositors. The asset and liability structure of Mutual Savings Banks and S&Ls are similar. Finally, Credit Unions are small cooperative lending institutions that have a "common bond requirement" for members, that is to say, for instance, that membership is granted to union members or employees of a particular firm, and there are not stockholders in credit unions. They are the most recent category of thrift and the only one that fully benefits of tax exemption. Although they can be chartered by the state or by the federal government, most Credit Unions are regulated by the National Credit Union Administration at federal level. Typically, these intermediaries have a small dimension serving only their members’ deposits (called shares) and borrowing needs.
Bibliography
Mishkin Frederic S. (2010), Economics of Money, Banking, and Financial Markets, Business School Edition (2nd Edition), Pearson Education Inc.
Fabozzi F., Modigliani F., Jones F. (2010), Foundation of Financial Markets and Institutions, Pearson International Edition.

Editor: Bianca GIANNINI 
© 2010 ASSONEBB