When you deposit funds in a bank and then the bank lends these funds to a borrower, the bank is engaged in

Question

Quizplus · Accepted Answer

When a bank takes in deposits from customers and then lends them out to borrowers, it is acting as a financial intermediary. This is a key function of banks, and is how they earn interest income and make profits. The bank is not engaged in fiduciary investment (where it is managing someone else's funds), fraudulent behavior (hopefully!), or universal banking (which refers to a model where a single financial institution offers a wide range of banking and non-banking services).

When You Deposit Funds in a Bank and Then the Bank