Lending and Investing Savings

Another basic function of financial institutions is lending and investing. The money that has been put into these intermediaries may be loaned to businesses, farmers, consumers, institutions, and governmental units. It may be loaned for varying time periods and for different purposes, such as to buy equipment or to pay current periods and for different purposes, such as to buy equipment or to pay current bills. Some financial institutions make loans of almost all types. Others specialize in only one or two types of lending. Still other financial institutions invest all or part of their accumulated savings in the stock of a business or in debt obligations of businesses or other institutions.