Financial Institution Institution Type Description They accept deposits from surplus units and make loans to and purchase debt securities from deficit units. They utilize the federal funds market to loan funds to other financial institutions and are regulated by the Federal Reserve. They are known for concentrating on residential loans. commercial banks credit unions Insurance companies They share the financial risk with their policyholders and reduce the financial burden associated with loss, damages, and other hardships. Policyholders make regular payments to these financial intermediaries for taking this risk. mutual funds pension funds savings institutions depository Institution securities firms They are nonprofit financial institutions owned by their members so that they can share funds among themselves. The members have a common bond, such as an employer, and act as the surplus units for the institution. Funds deposited by surplus units are then loaned to deficit unit members who need the funds. They accept deposits from surplus units and make loans to and purchase debt securities from deficit units. They utilize the federal funds market to loan funds to other financial institutions and are regulated by the Federal Reserve. They are known for concentrating on business loans. Grade it Now Save & Continue