Good article, Donny. You are right – this is how banks make money with our money. What few people realise though is that the biggest earner for banks is lending; traslated in PF terms this means debt. This is why banks will lend even to people they should’t be landing to.
How Banks Make Money - Cash Money Life
We all know that when you deposit a check, the money doesn't just stay in your bank's vault until you need to hit the ATM because this bar is cash-only. No, banks move around and invest most of what they take in. This is how banks make money, among other ways. There are, of course, rules now about how much banks have to hold in "reserves," but the problem before the Federal Reserve was this: What happens when all the depositors want their cash back at once, a la the in It's A Wonderful Life. As you'll recall, Jimmy Stewart's George Bailey tells the townspeople of Bedford Falls, "
How the banks make money - YouTube
We draw a number of conclusions about "how banks make money" and how this may matter for the future of the banking industry. First, we find substantial differences in profitability and risk across the various banking strategy groups. Importantly, low profitability does not necessarily doom a banking strategy. High average return strategies like corporate banking tend to generate high amounts of risk, while low average return strategies like community banking tend to generate less risk; thus, on a risk-adjusted basis, both high-return and low-return strategies may be financially viable. Second, we find that very small banks operate at a financial disadvantage regardless of their competitive strategy. …
How Investment Banks Make Money - Mergers & Inquisitions