savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. A common form of savings bank, the mutual savings bank, was traditionally the only type that accepted savings deposits exclusively (see banking banking, primarily the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by their principal functions of accepting deposits—subject to withdrawal or transfer by check—and of
..... Click the link for more information. ). Mutual savings banks are state-chartered institutions, owned by their depositors and managed for their mutual benefit by self-perpetuating boards of trustees. Savings deposits may also be received by a credit union credit union, cooperative financial institution that makes low-interest personal loans to its members. It is usually composed of persons from the same occupational group or the same local community.
..... Click the link for more information. or a savings and loan association savings and loan association, type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.

The first U.S. savings and loan association was founded in 1831.
..... Click the link for more information. . However, due to extensive deregulation in the banking industry (primarily during the 1980s), the distinction between savings banks and other financial institutions has become increasingly hazy. Federal deregulation laws in the 1980s gave savings banks the opportunity to become federally chartered institutions, to convert themselves into capital stock corporations, and to come under the supervision of the Federal Home Loan Bank Board. New lending powers, the removal of ceilings on interest rates, and takeovers of struggling small banks by larger ones have made the mutual savings bank, as it was understood until about 1980, largely obsolete.

Bibliography

See M. Mayer, The Money Bazaars: Understanding the Banking Revolution Around Us (1984); F. H. Ornstein, Savings Banking (1985).

savings bank

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.