As financial intermediaries,how do commercial banks pay their expenses and earn a profit?

Question

Quizplus · Accepted Answer

Commercial banks pay their expenses and earn a profit by charging borrowers a higher interest rate than they pay to depositors. This difference between the interest rate paid and received is known as the net interest margin, and it is the primary source of income for commercial banks. Therefore, option B is the best answer as it reflects this basic principle of banking. The other options are incorrect as they do not accurately reflect how commercial banks function.

As Financial Intermediaries,how Do Commercial Banks Pay Their Expenses and Earn