Because a bank pays a lower interest rate on deposits than it charges on loans, it cannot fail.

Question

Quizplus · Accepted Answer

This statement is false. A bank can still fail if it experiences significant losses, has poor management, or faces a liquidity crisis. The difference between the interest rates paid on deposits and charged on loans is known as the net interest margin, and while it can be a source of profit for banks, it does not guarantee their success or immunity from failure.

Because a Bank Pays a Lower Interest Rate on Deposits