DEFINITION of 'Morris Plan Bank'

A type of bank first established in 1910 to lend money to individuals who couldn't obtain loans from mainstream banks. Fidelity Savings & Trust Co. was the first Morris Plan bank. By 1931, there were 109 Morris Plan banks; however, that number declined after the economy recovered from the Great Depression and commercial banks began offering similar loans.

BREAKING DOWN 'Morris Plan Bank'

Named after the Morris Plan's founder, Virgina lawyer Arthur Morris, Morris Plan banks had a unique lending strategy. They did not require collateral for loans, but instead considered the character and community standing of applicants by requiring two endorsers. All three were required to fill out an application covering character, financial history, employment and wages. If the loan was granted, the borrower ended up paying a relatively high rate of interest.

RELATED TERMS
  1. Reverse Morris Trust

    A tax-avoidance strategy, in which a corporation wanting to dispose ...
  2. Commercial Bank

    A commercial bank is a type of financial institution that accepts ...
  3. Commercial Loan

    A debt-based funding arrangement that a business can set up with ...
  4. Lending Freeze

    A period of time when banks either do not have excess money to ...
  5. Loan Committee

    The lending or management committee of a bank or other lending ...
  6. Senior Bank Loan

    A debt financing obligation issued by a bank or similar financial ...
Related Articles
  1. Investing

    5 Things Philip Morris Wants You to Know (PM)

    With the power of the well-known Marlboro brand behind it, Philip Morris International (NYSE: PM) has become a player in the worldwide tobacco market. For a time, that gave Philip Morris an ...
  2. Investing

    3 Reasons to Buy Philip Morris International Stock (PM, AAPL)

    Among international tobacco companies, Philip Morris International (NYSE: PM) is the best known in the U.S., with competitors like British American Tobacco (NYSEMKT: BTI) taking a back seat ...
  3. Financial Advisor

    Philip Morris International's Profit Machine

    Even in an abstemious U.S., 18.1% of adults smoke. But that's nothing compared to the rest of the world, served by Philip Morris International.
  4. Investing

    Philip Morris Investing Big on Heated Tobacco (PM)

    Philip Morris is making big moves in anticipation of a growing trend.
  5. Investing

    Philip Morris Doubles Down on Greece for IQOS

    The Marlboro maker plans to use the still-recovering country as a base to export iQOS products.
  6. Investing

    Will PM Win Big on its ‘Reduced Harm’ Products?

    Piper Jaffray starts coverage of Philip Morris at overweight, foreseeing EPS growth from iQOS.
  7. Financial Advisor

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  8. Personal Finance

    Retail Banking Vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking, also known as business banking, refers to the aspect of banking that deals with corporate customers.
RELATED FAQS
  1. How do name-brand products compete with their generic competitors?

    On April 2, 1993, Phillip Morris announced that it was cutting the price of its cigarettes to compete with the growing number ... Read Answer >>
  2. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  3. How does investment banking differ from commercial banking?

    Discover how investment banking differs from commercial banking, the responsibilities of each and how the two can be combined ... Read Answer >>
  4. What's the difference between investment banks and commercial banks?

    Understand the principal differences between investment banks and commercial banks, and the areas of banking services that ... Read Answer >>
  5. What is the difference between a bank guarantee and a bond?

    Understand what a bank guarantee is and what a bond is, and which one is a debt instrument. Learn the differences between ... Read Answer >>
Trading Center