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How do depository institutions create liquidity?

In: Economics [Edit categories]

Answer:

Depository institutions make their money through ice fees from cheque clearing, account management, credit cards, and Internet banking. Although they make most of their money through using their funds they receive from depositors to make loans and buy securities that earn a higher interest rate than that paid by depositors. This is a bit riskier.

First answer by ID2211094706. Last edit by ID2211094706. Question popularity: 134 [recommend question].

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