Why do banks loan money to other banks?

Answer Banks loan money to other banks to maximize returns on excess funds and to comply with reserve requirements imposed by the government. Since banks try to maximize the return on all deposits, lendin... Read More »

Top Q&A For: Why do banks loan money to other banks

What Do the Banks Do With the Money After a Loan Is Repaid?

Banks generate earnings from the loans they make to consumers and a variety of other lenders. The money banks get from borrowers after a loan is repaid is cycled through the bank to make other loan... Read More »

Why do banks borrow money from each other?

The Federal Reserve requires banks to keep a certain supply of cash to cover deposits and financial transactions. If reserves fall short of requirements, banks borrow money from each other to remai... Read More »

What Happens to the Money Supply If Banks Don't Loan or Borrowers Don't Borrow?

In the United States, the Federal Reserve Board ultimately controls how much money is circulating in the economy by controlling how much money banks have access to and how expensive it is to borrow... Read More »

When do banks foreclose on a loan?

A bank will typically foreclose on a loan after you miss three or four payments. Foreclosure is defined as the process by which a lender, usually a bank or mortgage company, forces the sale of a ho... Read More »