the bank needs a liability to fund an asset
Illya Gerasymchuk
the bank needs a liability to fund an asset
when a bank gives you a loan it gains both an asset and a liability in the same amount
let's say you get a loan for $100
how banks work? bank's business model is very simple:
1️⃣ Take liability
2️⃣ Use liability to buy asset
3️⃣ Pocket the spread/carry
all of the bank's assets are financed by its liabilities
