The distinction between depository institutions and other financial institutions is that
A)only depository institutions seek to maximize profit
B)only depository institutions don't seek to maximize profit
C)depository institutions do not make loans
D)only depository institutions make loans
E)only depository institutions receive funds through customer deposits

Question

Quizplus · Accepted Answer

The best choice is E because depository institutions are unique in that they receive funds through customer deposits, which they then use to make loans and other investments. Other financial institutions, such as investment banks and insurance companies, may also make loans and invest funds, but they do not necessarily rely on customer deposits as a source of funding. Options A, B, C, and D are all incorrect statements that do not accurately distinguish depository institutions from other financial institutions.

The Distinction Between Depository Institutions and Other Financial Institutions Is