Banking & Financial Systems © 2013
Chapter 2: Financial Institutions
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Banking & Financial Systems © 2013
Chapter 2: Financial Institutions
Represents money a government
or company has borrowed from the
bondholder.
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bond
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Chapter 2: Financial Institutions
Provides loans for businesses, such as
retail stores.
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business finance company
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Formed by a manufacturer to provide
loans so the manufacturer can easily
sell its goods.
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captive finance company
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Chapter 2: Financial Institutions
A financial institution owned by investors that focuses
on business customers, providing bank accounts
commercial bank
along with specialized services such as foreign
exchange, investment services, and capital loans;
some also provide limited customer-oriented services,
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such as personal checking and savings accounts.
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Chapter 2: Financial Institutions
A fee, such as the kind charged by a
stockbroker for placing an order.
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commission
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A business or organization that is
owned by its members who cooperate
to run the organization.
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cooperative
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A financial institution that provides
many of the same services as
banks and S & Ls, but owned by its
members and run on a nonprofit
basis.
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credit union
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Provides high-interest personal loans
to individuals who have poor credit.
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consumer finance company
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Chapter 2: Financial Institutions
Money placed or transferred into a
bank account.
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deposit
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Chapter 2: Financial Institutions
Insurance that covers the deposits
of customers in the case of a bank
failure.
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deposit insurance
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Chapter 2: Financial Institutions
Arranges for depositors to maintain
their insured funds in the case of
bank failure. Depository institutions
pay premiums to this fund in order to
pool their money and share risk.
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deposit insurance fund (DIF)
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Chapter 2: Financial Institutions
A customer who makes a deposit.
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depositor
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Chapter 2: Financial Institutions
A contract designed to manage risk
and make money.
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derivative
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Chapter 2: Financial Institutions
Stockbroker who places orders for
customers at commissions lower than
full-service brokers and may offer
only limited services.
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discount broker
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Chapter 2: Financial Institutions
A payment.
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dividend
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Chapter 2: Financial Institutions
An independent federal agency
established in 1933 that provides
deposit insurance up to $250,000
for depositors in insured banks and
thrifts in the case of bank failure.
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Federal Deposit Insurance
Corporation (FDIC)
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Issues loans to both individuals and
businesses in order to make a profit,
also known as a loan company.
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finance company
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Any organization or business that
provides services related to money.
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financial institution
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Chapter 2: Financial Institutions
Advises customers on which
securities to buy and helps manage
investments.
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full-service brokerage firm
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A for-profit business that primarily
sells insurance.
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insurance company
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The person or thing covered by an
insurance policy.
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insured
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Chapter 2: Financial Institutions
A financial institution that provides
services for businesses, such as
raising capital through the stock
market.
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investment bank
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Chapter 2: Financial Institutions
A savings account that pays a higher
interest rate and requires a higher
minimum balance than a traditional
savings account.
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money market account
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Established in 1970 to insure credit
union deposits up to $250,000.
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National Credit Union Share
Insurance Fund (NCUSIF)
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A type of financial institution that
does not accept deposits but accepts
money from customers for the
purpose of investing in business deals
in order to spread risk and provide a
means of investment.
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non-depository institution
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Instead of paying profits to
shareholders, money made by notfor-profit credit unions is returned
to members in the form of higher
interest rates on savings accounts
and lower interest rates on loans.
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not-for-profit
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Provides short-term high-interest
loans designed to cover expenses
until the borrower's next payday.
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payday lender
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Periodic payments made to purchase
an insurance policy.
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premium
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Chapter 2: Financial Institutions
A deposit account at a depository
institution that earns interest and
provides a safe place to store money.
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savings account
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Chapter 2: Financial Institutions
A type of financial institution that
helped customers save money by
allowing small deposits and home
loans; also known as a savings
association or thrift institution.
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savings and loan
association (S & L)
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Chapter 2: Financial Institutions
Financial instruments that pay
interest or give the investor part
ownership of the company; issued by
investment banks.
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securities
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A type of financial institution involved
in the trading of securities in financial
markets; also called a brokerage firm,
stockbroker, or bondbroker.
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securities firm
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A savings account at a credit union.
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share account
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A checking account at a credit union.
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share draft account
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A security that gives the purchaser
part ownership in the company,
known as equity.
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stock
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An investor who expects to make a
return from his or her investment in
stock.
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stockholder
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A bank account that allows the owner
to use it to pay a third party, such as
a checking account.
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transaction account
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Chapter 2: Financial Institutions
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