Financial institutions make a profit by lending at a higher rate than they borrow, accepting deposits from savers and providing loans to borrowers. This process generates profits through the interest rate difference.
Financial institutions make a profit by lending money at a higher rate than they borrow. They accept deposits from savers and lend to borrowers at a higher interest rate, generating profits. For example, banks offer loans to individuals or businesses at a higher interest rate than what they offer on savings accounts.
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