2 ms·
We were taught in school that a bank takes deposits and lends them out as loans but that's not how it really works. When a bank makes a house loan for example,
by chrisbennet 12y ago
We were taught in school that a bank takes deposits and lends them out as loans but that's not how it really works.
When a bank makes a house loan for example, the house is added to their balance sheet and it becomes an asset that they can lend again, minus a fraction.