Credit unions and life insurance companies would not hold municipal securities in their portfolios. Credit unions and life insurance companies are not taxed as high percentage as casualty companies. The major determinants of an FI s liability structure are the range of financial services offered and any specialization in particular service. Diversification will help cover the losses of some investments with the profits of other loans and investments. In the event of widespread economic collapse, diversification will not always reduce the risk.
Depository institutions have deposit insurance.
They were actually benevolent philanthropic institutions set up to encourage the poor and the working class to save to relieve poverty and pauperism. Exhibits throughout the chapter illustrate the major sources of funds and major uses of funds for the various depository institutions.