- are not in association with other banks, but operate independently;
- more often give loans to clients in their state;
- have fewer problem loans, because know their borrowers better;
- more often focus on work in one industry, or with a certain circle of enterprises;
- usually do not have specialization in operations and work style;
- make decisions quickly, because power is concentrated in one place;
- use the income for the development of the bank;
- do not distribute risks, in the event of a crisis they can quickly close.
Branch Banks:
- often belong to banking associations, may be subsidiaries of other banks;
- lending regardless of the geography of clients;
- serve different industries;
- they risk more when issuing loans, because they evaluate clients more often by formal criteria;
- distribute risks between branches, which makes the system more stable;
- make decisions slower, because power is distributed vertically;
- more easily endure crises, tk. distribute risks between industries and regions.
Investment banks
In the United States, investment banks are a special category of commercial banks that do not issue loans, do not accept deposits, but are primarily engaged in securities transactions. Other banks also carry out such operations, but mainly with government securities.
Investment banks are engaged in shares and bonds of industrial and trading companies. Their operations with securities are most often:
initial placement of securities and a guarantee of the redemption of their entire volume (underwriting);
trading in securities, incl. on exchanges (banks can be professional members of exchanges);
advice and support for decisions of stock market investors.
During periods of growth of indices, US investment banks received up to 70% of profits per year.
Non-bank credit institutions
There are many non-bank financial institutions operating in the United States. Credit unions and mutual credit societies should be singled out in a special category.
They are mainly engaged in mortgage and consumer lending at low rates.
Their capital consists of contributions from members who are both creditors and owners of the association.
Credit unions and mutual credit societies are not subject to state law and do not pay taxes.
