Depository Institutions, Contractual Saving Institutions, and Investment Intermediaries

Depository Institutions, Contractual Saving Institutions, and Investment Intermediaries
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Depository Institutions, Contractual Saving Institutions, and Investment Intermediaries Introduction
Depository institutions, contractual saving institutions, and investment intermediaries are important elements to the economy. What is the meaning of the aforementioned institutions? First, an investment intermediary is a financial institution that acts as an intermediary between two parties. The term contractual saving institutions could be elucidated as savings institutions that source funds through long-term contractual arguments and investing them in capital markets. Ultimately, depository institutions are concerned with accepting and soliciting savings from the public as time deposits by paying interest (Madura, 2010). This paper discusses the roles of all the financial institutions mentioned before.
The Role of Depository Institutions
To begin with, depository institutions are also known as deposit taking institutions because of their role. These institutions specialize in accepting deposits and using this money for lending purposes. Their lending activities include commercial loans, channeling money for mortgage loans, and real estate loans. In short, depository inst...