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Banking

Banking. Economics 120. Canadian Chartered Banks. Chartered bank – term used to describe a financial institution operating under the authority of Parliament that accepts deposits and lends money to businesses, government, and households. Types of Deposits.

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Banking

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  1. Banking Economics 120

  2. Canadian Chartered Banks • Chartered bank – term used to describe a financial institution operating under the authority of Parliament that accepts deposits and lends money to businesses, government, and households

  3. Types of Deposits • Chequing account – demand deposit (your money is available to you on demand). Often carries a monthly fee and pays a low (or no) rate of interest • Savings account – higher rate of interest than the chequing account and is intended for short-term savings

  4. Types of Deposits • Term deposits – depositor leaves the money with the bank for a fixed amount of time. Range from 1 day to 5 years, minimum investment usually $1000 • Guaranteed investment certificates (GICs) – depositor leaves the money with the bank for a fixed term, minimum deposit is usually $5000, higher rate of interest than term deposits

  5. Types of Deposits • Mutual funds - professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.

  6. Canadian Banks vs US Banks • The system in Canada is referred to as branch banking. • Branch banking – a system of banking in which a commercial bank is allowed to operate branches of the main bank. • In Canada there are 8 domestic chartered banks. Foreign banks are allowed to operate in Canada, but they are not allowed to have an extensive system of branches like Canadian banks.

  7. Canadian Banks vs US Banks • The system in the USA is unit-banking. • Unit banking – the system in which commercial banks are either not allowed to operate branches or allowed to operate only a limited number. • There are no banks with offices all across the country. Some banks regulated by federal law; others regulated by state law. Some states allow branches, but they are usually within a restricted area. The U.S. has more than 13 000 commercial banks.

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