Conventional introductory textbooks that are economic treat banking institutions as monetary intermediaries, the part of which can be for connecting borrowers with savers, assisting their interactions by acting as legitimate middlemen. People who generate income above their immediate usage requirements can deposit their unused earnings in a bank that is reputable hence making a reservoir of funds from where the financial institution can draw from to be able to loan down to those whoever incomes fall below their immediate usage requirements.
While this whole tale assumes that banking institutions require your cash so as to make loans, it is in reality somewhat deceptive. Read more