What is a bank?

A bank is a business. But unlike some businesses, banks don’t manufacture products or extract
natural resources from the earth. Banks sell financial services such as car loans, home mort-gage loans, business loans, checking accounts, credit card services, certificates of deposit, and
individual retirement accounts.

Some people go to banks in search of a safe place to keep their money. Others are seeking to
borrow money to buy a house or a car, start a business, expand a farm, pay for college, or do
other things that require borrowing money.

Where do banks get the money to lend? They get it from people who open accounts. Banks act
as go-betweens for people who save and people who want to borrow. If savers didn’t put their
money in banks, the banks would have little or no money to lend.

Your savings are combined with the savings of others to form a big pool of money, and the
bank uses that money to make loans. The money doesn’t belong to the bank’s president, board
of directors, or stockholders. It belongs to you and the other depositors. That’s why bankers
have a special obligation not to take big risks when they make loans.

Source from : http://www.bos.frb.org