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Any institution that collects money and puts it into assets such as stocks, bonds, bank deposits, or loans is considered a financial institution. There are two types of financial institutions: Depository institutions and nondepository institutions.
Depository institutions, such as banks and credit unions, pay you interest on your deposits and use the deposits to make loans. Nondepository institutions, such as insurance companies, brokerage firms, and mutual fund companies, sell financial products.
Many financial institutions provide both depository and nondepository services.
- Browse Related Terms: Check hold, Checking account, Commercial bank, Comptroller of the Currency, Federal Deposit Insurance Corporation (FDIC), Federal funds, Federal Reserve Fedwire, Federal Reserve System, Financial institution, Loose credit, Mutual company, National Bank, Nonbank banks, Open-market operations, Regulation D, Reserve requirement