What best defines a depository institution?

A depository institution is best defined as a business that provides financial services, specifically those services that pertain to accepting deposits from the public and providing loans. These institutions, such as banks and credit unions, play a crucial role in the economy by facilitating the flow of money within the banking system. They not only provide safekeeping for consumer deposits but also offer a range of services including checking and savings accounts, mortgages, and personal loans.

While investment advisory firms, real estate companies, and government entities may provide important financial services, they do not primarily serve the core function of accepting deposits and providing loans. Investment firms focus more on wealth management and securities, real estate companies emphasize property transactions, and government entities may handle specific funds or budgets rather than the broader scope of banking services offered by depository institutions. Thus, defining a depository institution as a business that provides financial services encompasses its fundamental role in the financial system.