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Why are institutional investors important in today's business world?

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A legend surrounding the late bank robber Willie Sutton has the by-then-incarcerated criminal responding to the question why he robs banks as replying, “because that’s where the money is.” This is not to suggest that institutional investors are criminals; they are not, except in rare circumstances in which they are investigated for violations of securities regulations. The purpose of including the quote in this answer is to highlight the role of institutional investors in funding projects in today’s business environment. Institutional investors are usually, but not always, groups of investors, often pension and mutual funds, commercial banks, money managers, etc., who control very large amounts of money seeking investment opportunities for further growth and protection against taxation. Institutional investors are important today because that’s where the money is.

There is often a level of financial stability surrounding many institutional investors that may not exist among...

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