Banks that are financial intermediaries generate earnings when they facilitate the transfer of money from savers to borrowers by paying savers a smaller return than they demand from borrowers.

Question

Quizplus · Accepted Answer

This is the fundamental concept of how banks make profits as financial intermediaries. They borrow money from savers at a lower interest rate and lend it to borrowers at a higher interest rate, earning a profit from the difference in interest rates.

Banks That Are Financial Intermediaries Generate Earnings When They Facilitate