Savings institutions participate in the swap market primarily to

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Savings institutions participate in the swap market primarily to reduce interest rate risk. By swapping fixed-rate payments for floating-rate payments or vice versa, savings institutions can manage their exposure to interest rate fluctuations. They may also use swaps to match the cash flow characteristics of their assets and liabilities, or to enhance their return on investment by investing in securities with a higher yield than their funding costs. However, they typically do not serve as an intermediary or dealer in the swap market.

Savings Institutions Participate in the Swap Market Primarily to