A core function of the banking system is to enable people lucky enough to have some money to earn interest by lending it out to users who can afford to borrow it.
Banks are regulated principal intermediaries between the two groups. They take a margin between the cost of their own liabilities paid to depositors and the charges on their loans to borrowers. That margin pays for credit underwriting and other infrastructure, expected losses and, in theory, leaves a surplus for banks’ shareholders.
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