One of the primary functions of a bank is to act as a financial intermediary, taking in deposits from customers and lending those funds out to borrowers. This means that a bank's assets (the loans it has made) have a different maturity than its liabilities (the deposits held by customers). Banks are also subject to regulation by government agencies, including the Federal Reserve in the United States.

Solved

A Bank

Question 19

Multiple Choice

A bank

A) cannot be regulated.
B) is essentially the same as an insurance company.
C) has assets with maturity that is different from that of its liabilities.
D) performs no useful social function.
E) is not a financial intermediary.

Correct Answer: