How do banks earn revenue by lending money?
All banks earn a revenue by lending money. Banks make profit and generate revenue by two ways:By charging you a fee for the services they provide youBy lending the money you have deposited into your account, to other loan customers and getting an interest on the same.Interest income is the highest revenue and profit generator for any bank.
Related Q&A：
If the required reserve ratio is 20 percent and a customer deposited 5000 in the bank how much is av-Well, let's do the math here. The required reserve ratio is 20 percent. So, 20 percent of $5000 is $1000. That's the amount that the bank has to keep in reserve. The remaining amount that's available for lending or other purposes would be $5000 minus $1000, which is $4000. So, the available amount would be $4000. Isn't that simple?
