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Abstract
The savings and loan industry is an outgrowth of the building society movement in Great Britain. Savings and loan associations and building societies have similar housing finance functions as well as similar organizational and balance sheet structures. In the past three years, however, the savings and loan industry has experienced serious difficulties while the building societies have been healthy. Differences in the kinds of deposits building societies can accept and, especially, differences in the type of mortgages they make may explain the differences in the condition of the two industries. Savings and loans faced deposit rate ceilings and made fixed rate loans. Building societies made variable rate loans and have been able to compete for deposits. Although the British experience may not be directly transferable to the U.S., the success of the building societies offers some insight into long-run solutions to the problems of the savings and loans.
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Patricia M. Rudolph
Patricia M. Rudolph is assistant professor of Finance, the University of Alabama, University, Alabama. The University of Alabama Research Grants Committee provided partial funding for this research.