Final answer:
Banks must fill two distinct needs: attracting depositors and borrowing funds for lending.
Step-by-step explanation:
Banks must fill two distinct needs:
- Attracting depositors by guaranteeing to pay them interest on their savings accounts.
- Borrowing money from other banks or central government-run banks to acquire funds for lending.
In addition, some banks may also make investments in stocks, bonds, and other financial instruments to earn higher rates of return.