The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

Name: The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.
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Banks are able to make illiquid loans because they can pool together the liquid deposits from multiple depositors, allowing them to have a larger pool of cash on hand to make loans from.

The Key to the Banks' Ability to Make Illiquid Loans