How Do Banks Function?

How do banks function? Well, commercial banks borrow money from individuals, companies, the government, and other institutions by accepting deposits. Banks then earn their money by loaning out money and charging interest on those loans. The Federal Reserve System determines a bank’s reserve ratio (how much money a bank must keep on reserve).

How Banks Function
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by Mometrix Test Preparation | This Page Last Updated: February 23, 2022

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