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Rose MCM cover
Money and Capital Markets: Financial Institutions and Instruments in a Global Marketplace, 8/e
Peter Rose, Texas A & M University
Nonbank Thrift Institutions: Savings and Loan Associations, Savings Banks, Credit Unions, and Money Market Funds

Chapter Summary

Thrift institutions—savings and loan associations, savings banks, credit unions, and money market funds—are among the most popular financial institutions within the financial system. They are especially well-known to individuals and families (households)—their principal customer base.
  • Thrift institutions began their history primarily to reach small savers (individuals and small businesses) and help this group of customers achieve home ownership, a better education, satisfactory preparation for retirement, and other personal financial goals. Over time, however, thrifts have diversified their services and attempted to reach out to a broader customer base, including both households and some business enterprises.
  • Some thrift institutions (particularly money market funds) have experienced rapid growth, while others (especially savings and loan associations) have experienced relatively slow or even negative growth at times. Many of the more troubled thrift institutions have been merged into larger and healthier financial-service companies (including banks and financial holding companies) or simply closed their doors.
  • Nevertheless, thrift institutions have continued to be tough competitors with banks, often outbidding banks for their customers’ checking accounts, savings deposits, home mortgages, and personal installment loans. Unlike many other financial intermediaries they are primarily local service providers, though some thrifts have grown to become nationally and internationally known institutions.
  • Like the banking industry (discussed in the previous chapter) the thrift industry is experiencing waves of changing technology as they seek to provide more electronic financial services in order to lower overhead and personnel costs and improve customer service.
  • Thrifts have paralleled banks in a trend toward consolidation with these financial-service industries contracting into smaller numbers of thrifts, but the average thrift institution has increased substantially in overall size. In turn, these larger thrifts have broadened their service menus and are reaching out to expand their beach front within the global financial marketplace.




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