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Class%20#3%20461%20DFI0 - Depository Financial...

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Depository Financial Intermediaries (DFIs) Commercial banks, savings banks, savings and loan associations, and credit unions
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2 Current events presentations TODAY: Chloe Lu Xie THURSDAY: Volunteer Assignment: Text, Chapter 3 “The Hidden Pension Threat” (handout in class today)
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3 Class Outline 1. How a DFI borrows and lends 2. Types of DFIs 3. DFI industry structure Numbers and sizes of banks Charters 4. Organizational structures Branches and bank holding companies
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4 1. How a DFI borrows and lends Borrows : DFIs issue (sell) liabilities on themselves that have characteristics desired by surplus units Mostly these liabilities are called deposits , or are like deposits but called by another name ( shares ) What is special about deposits ?
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5 How a DFI borrows and lends Borrows : Issue (sell) liabilities (mostly deposits) on themselves that have characteristics desired by surplus units Lends : Primarily by making loans . DFIs are o riginators of loans (compared to most other FIs that do not have a loan origination function). They do acquire securities (direct claims), but not many securities compared to loans
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6 2. Types of DFIs Commercial banks Thrifts (savings banks and savings & loan associations) Credit unions Each type has its own story of why and how it came into existence; each served a specific function or group originally. All are more alike and serve similar customers and functions today.
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7 DFI characteristics Liabilities are similar among all these different DFIs; most liabilities are deposits or are like deposits (some are called shares); some purchased funds liabilities. Assets are mostly loans , with some differences among types of borrowers. Look at balance sheet structures of each DFI type
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8 Asset and Liability Structures of FIs as a % of total financial assets COMMERCIAL BANKS Assets 1976 1986 1996 2010 Liabilities 1976 1986 1996 2010 Business loans 32% 28% 22% 12% Transactions accts 26% 22% 14% 5% Mortgage loans 19% 19% 24% 26% Savings/small time dep 34% 38% 34% 35% Consumer loans 15% 12% 11% 8% Purchased funds 26% 20% 21% 19% US securities 11% 12% 16% 11% Tax-exempt securities 11% 8% 2% 2% Corporate securities 1% 2% 2% 5% Total fin'l assets (bil) 1,052 2,620 4,710 14,439 SAVINGS AND LOAN ASSOCIATIONS AND SAVINGS BANKS Assets 1976 1986 1996
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