Economic Institutions

Economic Institutions

Let us review the Characteristics of an Institution

Multiple Choice

Which of the following is not an example of an economic institution?

• Banks

• Parks and recreation centers

• Credit Unions

• Building Socities

Big Question: Why would Parks and recreational not be an example of Economic Institutions

Banks, insurance companies, building societies, and credit unions are all financial institutions, but they differ in their primary functions, organizational structures, and the services they provide.

How would you say the following instituions differ?

Banks
Credit Union
Insurance Companies
Building Society

Banks

• Functions: Banks primarily focus on financial services such as deposit-taking, lending, investment, and payment services. They offer a wide range of financial products and services catering to both individuals and businesses.

• Ownership: Banks can be privately owned, publicly traded, or even government-owned, depending on their structure and jurisdiction.

• Regulation: Banks are subject to specific banking regulations and oversight by central banks and financial regulatory authorities, ensuring compliance with legal and financial standards.

Insurance Companies

• Functions: Insurance companies specialize in risk management and provide financial protection against potential losses. They offer various types of insurance products, such as life insurance, health insurance, property insurance, and casualty insurance.

• Ownership: Insurance companies are typically owned by shareholders, with profits distributed among the shareholders based on the company's performance.

• Regulation: Insurance companies are subject to insurance regulations that vary by jurisdiction, ensuring that they have adequate reserves to cover potential claims and operate in a financially sound manner.

Building Societies

• Functions: Building societies primarily focus on providing savings and mortgage services to their members. They often operate as mutual organizations, prioritizing the financial well-being of their members rather than maximizing profits for shareholders.

• Ownership: Building societies are owned by their members, who have a say in the decision-making process and share in the financial success of the organization.

• Regulation: Building societies are subject to specific regulations that govern their operations, focusing on maintaining financial stability and protecting the interests of their members.

Credit Union

• Functions: Credit unions provide savings and loan services to their members, offering competitive interest rates and financial products similar to those offered by banks. They often prioritize financial education and community development.

• Ownership: Credit unions are owned and operated by their members, who have equal voting rights in the governance of the institution.

• Regulation: Credit unions are subject to regulations specific to cooperative financial institutions, ensuring their financial stability and adherence to cooperative principles.

Draw

Pretend that you are an Architect, draw a blueprint of an economic institution of your choice.

Open Ended

Based on what we have discussed thus far, what are functions of the following Economic Institutions: Banks, Insurance Companies, Credit Unions and Building Societies.

Let's examine the functions

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