Comment Comment by fanzhang Banks absolutely do lend out deposits. An average bank will take a $100K in deposits, have $10K in equity, and then lend out $110K in a mortgage.> Banks lever their capitalAnd with what do the banks lever up their capital? (What is the indirect object of that sentence?) The answer, of course, is deposits.Take an example of a bank local to me: http://ir.cambridgetrust.com/AsReported/IndexThey have about a $1.370B in deposits. Where do they put it? Look in the assets section and you'll see it's all commercial and residential mortgages. parent fanzhang 8 years ago
> Banks lever their capital
And with what do the banks lever up their capital? (What is the indirect object of that sentence?) The answer, of course, is deposits.
Take an example of a bank local to me: http://ir.cambridgetrust.com/AsReported/Index
They have about a $1.370B in deposits. Where do they put it? Look in the assets section and you'll see it's all commercial and residential mortgages.