Why do banks loan money to people and companies?

Banks lend money to companies to encourage them to use business checking and savings accounts, financial advisory services, tax preparation services and even investment banking services in a different branch of the bank. Banks borrow and lend money in the interbank lending market in order to manage liquidity and satisfy regulations such as reserve requirements. The interest rate charged depends on the availability of money in the market, on prevailing rates and on the specific terms of the contract, such as term length.

The banks lend money to customers at a higher rate than they pay to depositors or than they borrow it. The difference, known as the margin or turn, is kept by the bank. For example, if a bank pays 1% interest on deposits, they may charge 6% interest on loans. Another way banks make money is through charging fees.

Money is created when banks lend. The rules of double entry accounting dictate that when banks create a new loan asset, they must also create an equal and opposite liability, in the form of a new demand deposit. In this sense, therefore, when banks lend they create money.

Explanation:

east-west schism. the greatest effect of the east-west schism was the creation of two separate churches that had previously been unified under one church, the eastern orthodox church and the roman catholic church.

a more perfect union: the creation of the u.s. constitution. the vote was unanimous. saddled with this weak government, the states were on the brink of not to lend a hand to any proceeding that seemed to pose a threat to that protection. delegates from virginia and other large states demanded that voting in