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Paper Topic:

Similarities and Differences between Credit Unions and Commercial Banks

COMMERCIAL BANKS AND CREDIT UNION

Compare and Contrast the Commercial Bank and the Credit Union

Commercial Banks

Commercial banks are the principal financial institution which is directly concerned in the finance of the real estate . The real estates they are involved have activities involving short term loans disbursement . Commercial banks also act as a mediator between an issuer of securities , the investing clients facilitate mergers and other business reorganizations . The banks can also act as a broker for clients . They are what people normally called the banks . Though it used

to differ from investment banks but today both are no longer separated in terms of what they do . The commercial bank sole aim is to accept deposits and makes business loans available to the clients and also offer some other forms services . The functions of commercial banks are basically categorized into two primary and secondary functions

The primary functions can also be grouped into two accepting deposits and granting of loans and advances to the customer . Accepting deposits from the customers is usually in form of current deposits , fixed deposits , recurring deposits , savings deposits and miscellaneous deposits . The granting of loans is usually done through the short time financial assistance to customers in the form of cash credit , over draft , loans and discounting bills

Secondary functions

Issuing letters of credit and travelers cheques

Help keep valuables and important documents through provisions of safe deposit vaults

Foreign exchange services for customers

Local and international money transfer

Standing guarantee on customers ' behalf in for the customers to make payment for goods

They also help collect and supply business information

They also function by issuing demand drafts and pay s

Credit Union

Is an institution created with the sole purpose of serving the low income earners of the community who are far from the banks . It 's usually formed by group of people with a common goal which is to save their money together and make low cost loans to each member . This short term loans are mainly given to the member to purchase automobiles , household needs , medical needs and emergencies . The loans from credit union are quite important in developing world because it may serves as the only source of credit to many individual . The loans are also use for agricultural production and small scale business . The unions normally operate under the government directive and supervision and the members at of the board of director are usually elected by the members of the credit unions . The various committees are usually appointed or elected by the same procedure

The first credit union was established in 1884 by a group of farmer in the German Rhineland . The movement was later introduced to North America . The first Canadian credit union was founded in Quebec in 1900 and first in United States was founded in 1909 (Encarta Microsoft Student 2008

Similarities between commercial banks and the credit unions

Savings both institution allows the people to save and lend money

Product Both financial institution offers mortgages...

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