Final answer:
Banks, savings and loans, and credit unions are related as depository institutions offering services like taking deposits and extending loans. While commercial banks serve individuals and businesses broadly, savings institutions, or thrifts, traditionally focused on housing-related loans, with certain interest rate restrictions. Credit unions are member-owned cooperatives providing similar services to their members.
Step-by-step explanation:
Relationship between Banks, Savings Institutions, and Credit Unions
Banks, savings institutions, and credit unions are all types of depository institutions that provide similar services to their customers, such as taking deposits and extending loans. Commercial banks were established to assist businesses by facilitating financial transactions, issuing checks, and managing business expenses. Savings institutions, also known as savings and loans or thrifts, traditionally offered deposit and loan services similar to banks, but with restrictions on the interest they could pay and a focus on housing-related loans. Credit unions are member-owned financial cooperatives that also offer deposit and lending services to their members.
Despite differences in their structures and focuses, these institutions serve the important function of supporting both savers and borrowers, providing secure locations for individuals to save money, and considering credit scores when issuing loans. Financial institutions, including these three, play a crucial role in the economy by managing the flow of money between savers who want to deposit their funds and borrowers who seek loans.