It;s also called the Multiplier Effect
Reply: 3.1
From: Paul Zagoridis
The multiplier effect is an old economic phenomenum
In the old days banks used to keep a % of their assets on deposit with the RBA to insure the integrity of the banking system.
How did banks start?
I'm a Swiss...
Reply: 2
From: Paul Zagoridis
Except that the1.5% margin on $Billions is not 1.5%
If they borrow at 5% and lend at 6.5% they are making 30%
Also merchant fees on credit cards purchases run at 1.5% to 2.5% on every dollar.
Look at the prudential requirements for their different asset...
