Money Market Institutions - SS2 Economics Lesson Note

Money market institutions are financial institutions that specialize in short-term lending and borrowing activities, typically with maturities of less than one year. These institutions provide liquidity and funding to financial markets by borrowing funds from savers and lending them to borrowers who need short-term financing.

Examples of money market institutions include commercial banks, savings and loan associations, and credit unions. These institutions accept deposits from customers and provide short-term loans to businesses and other entities in need of financing.

Money market funds are also an important example of money market institution. These funds invest in short-term debt securities such as treasury bills, commercial paper, and certificates of deposit, and provide investors with a low-risk investment option that typically offers higher yields than traditional savings accounts.