Question

How does bank mediate between a depositor and a borrower

Answer 1

Banks take money to the depositers and give low interest . Borrowers take money to the bank and bank take high interest. Banks have only 15 percent of the depositer. And rest of the money give to the borrowers.

Answer 2

Banks receive the deposits and also give profit in the form of the interest rate on the deposits. In this way, banks arbitrate between those who have surplus stocks the i.e depositors and those who are in requirement of these funds i.e the borrowers. Banks impose a higher percentage rate on investments than what they offer on deposits.