savings bank

savings bank
a bank that receives savings accounts only and pays interest to its depositors.
[1810-20]

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Financial institution that gathers savings and pays interest or dividends to savers.

It channels the savings of individuals who wish to consume less than their incomes to borrowers who wish to spend more. This function is performed by mutual savings banks, savings and loan associations, credit unions, postal savings systems, and municipal savings banks. Unlike a commercial bank, a savings bank does not accept demand deposits. Many savings banks originated as part of a philanthropic effort to encourage saving among people of modest means. The earliest municipal savings banks developed from the municipal pawnshops of Italy (see pawnbroking). Other early savings banks were founded in Germany in 1778 and The Netherlands in 1817. The first U.S. savings banks were nonprofit institutions established in the early 1800s for charitable purposes.

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▪ financial institution
      financial institution that gathers savings, paying interest or dividends to savers. It channels the savings of individuals who wish to consume less than their incomes to borrowers who wish to spend more. This function is served by the savings deposit departments of commercial banks, mutual savings banks or trustee savings banks (banks without capital stock whose earnings accrue solely to the savers), savings and loan associations, credit unions, postal savings systems, and municipal savings banks. Except for the commercial banks, these institutions do not accept demand deposits. Postal savings systems and many other European savings institutions enjoy a government guarantee; savings are invested mainly in government securities and other securities guaranteed by the government.

      Savings banks frequently originated as part of philanthropic efforts to encourage saving among people of modest means. The earliest municipal savings banks developed out of the municipal pawnshops of Italy. Local savings banks were established in The Netherlands through the efforts of a philanthropic society that was founded in 1783, the first bank opening there in 1817. During the same time, private savings banks were developing in Germany, the first being founded in Hamburg in 1778.

      The first British savings bank was founded in 1810 as a Savings and Friendly Society by a pastor of a poor parish; it proved to be the forerunner of the trustee savings bank. The origin of savings banking in the United States was similar; the first banks were nonprofit institutions founded in the early 1800s for charitable purposes. With the rise of other institutions performing the same function, mutual savings banks remained concentrated in the northeastern United States.

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Universalium. 2010.

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