Banks earn profit by
A)borrowing from depositors at a lower interest rate, and lending those funds at a higher interest rate.
B)reducing the service charges for safety vaults and ATM facilities.
C)lending more loans to non-risky business firms.
D)reducing the amount of transaction deposits.

Question

Quizplus · Accepted Answer

Banks earn profits by borrowing funds from depositors at a lower interest rate and lending those funds at a higher interest rate to borrowers. The difference between the interest paid to depositors and received from borrowers is the bank's profit. This is the primary source of income for most banks. The other options listed do not directly relate to how banks earn profits.

Banks Earn Profit by