<p>To see how much a bank lends in comparison to deposits, you can look at what is called the <a href="http://www.investopedia.com/terms/l/loan-to-deposit-ratio.asp" rel="nofollow noreferrer">loan-to-deposit</a> (LTD)ratio of banks in their annual reports. Usually it is between 60% and 90% but as you mentioned this can vary upon institutions .. And geographic areas as well ! For instance, in 2015 in the EU <a href="https://www.eba.europa.eu/-/eba-finds-further-increase-in-eu-banks-capital-ratios-in-2015" rel="nofollow noreferrer">the average LTD ratio was 108%</a> whereas in the US the average is about 79%. You can check <a href="https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20150629a1.pdf" rel="nofollow noreferrer">per state the LTD ratio from data gathered by the Fed and the FDIC</a>.</p>
<p>As to factors that determine this amount, I would probably put regulation as the first point. If I had to think about other macro points that could affect the LTD I would probably mention interest rate and in particular LIBOR rates as they tend to give an idea about the financial stress on the banking level and therefore to a certain extend the willingness for a bank to lend money and/or to require more liabilities.</p>

CC BY-SA 3.0
2017-01-27T16:00:33.910Z
When banks make use of non-deposit funding then the loan to deposit ratio doesn't tell you how much a marginal dollar of additional deposits would translate into additional dollars of lending.
BKay
CC BY-SA 4.0
2016-06-21T23:38:44.690Z
2022-01-20T21:22:00.053Z
2022-01-20T21:22:00.053Z
Alexis L.
<p>Banks do not make loans using deposits from their customers. So there is never a risk of running out of money to lend. Banks create money when loans are made, and the money is destroyed when the loan principal is repaid.</p>

<p>The only real limit to the amount of loans banks can make is their appetite for the risk that the loan will not be repaid, and mandated <a href="https://en.wikipedia.org/wiki/Capital_requirement" rel="nofollow noreferrer">capital requirements</a>. Customer deposits are not involved, and neither is any of the banks own profits.</p>

CC BY-SA 3.0
2017-01-30T04:24:37.980Z
Please leave a comment if you are downvoting, and explain why.
Daniel Alexiuc
CC BY-SA 4.0
2022-01-20T18:18:11.473Z
I didn't downvote you, but you were probably downvoted for being wrong. Deposits are a source of funding for bank lending. Any bank's public reporting will discuss them, see this one for example: http://eqbank.investorroom.com/download/EQB+MD%26A+and+FS+-+Q4+2020+vSEDAR.pdf
James Wattam
CC BY-SA 4.0
2022-05-05T00:37:38.447Z
@JamesWattam That's a common misconception. Have a read of this: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
Daniel Alexiuc
CC BY-SA 4.0
2022-05-06T16:23:10.803Z
From page 81 of the [Royal Bank of Canada's 2021 annual report](https://www.rbc.com/investor-relations/_assets-custom/pdf/ar_2021_e.pdf), "... relationship-based deposits, which are the primary source of funding for retail loans and mortgages, were $771 billion or 55% of our total funding..."
James Wattam
CC BY-SA 3.0
2017-01-27T03:24:38.580Z
2017-01-30T04:27:33.763Z
2017-01-30T04:27:33.763Z
Daniel Alexiuc
<p>Say a bank has 1 billion dollars deposited by individuals with bank accounts. How much of this does the banks lend/invest? Obviously it can't lend all of it or when I go to the bank there would be no money for me to take out. I realize this probably varies between institutions but in general about how much.</p>

<p>Also, what factors would contribute to the percentage they lend relative to the amount the bank has. For example, interest rates, inflation etc.</p>

<banking><money>
What percentage of a bank's deposits are lent out?
steve
# What percentage of a bank's deposits are lent out?

(Asked by: username_0 on 2016-06-19)

Say a bank has 1 billion dollars deposited by individuals with bank accounts. How much of this does the banks lend/invest? Obviously it can't lend all of it or when I go to the bank there would be no money for me to take out. I realize this probably varies between institutions but in general about how much.

Also, what factors would contribute to the percentage they lend relative to the amount the bank has. For example, interest rates, inflation etc.

**Tags:** banking, money


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## 2 answers

### Answer by username_1 on 2016-06-21. Score: 6

To see how much a bank lends in comparison to deposits, you can look at what is called the [loan-to-deposit](http://www.investopedia.com/terms/l/loan-to-deposit-ratio.asp) (LTD)ratio of banks in their annual reports. Usually it is between 60% and 90% but as you mentioned this can vary upon institutions .. And geographic areas as well ! For instance, in 2015 in the EU [the average LTD ratio was 108%](https://www.eba.europa.eu/-/eba-finds-further-increase-in-eu-banks-capital-ratios-in-2015) whereas in the US the average is about 79%. You can check [per state the LTD ratio from data gathered by the Fed and the FDIC](https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20150629a1.pdf).

As to factors that determine this amount, I would probably put regulation as the first point. If I had to think about other macro points that could affect the LTD I would probably mention interest rate and in particular LIBOR rates as they tend to give an idea about the financial stress on the banking level and therefore to a certain extend the willingness for a bank to lend money and/or to require more liabilities.

> **Comments:**
> **username_2**: When banks make use of non-deposit funding then the loan to deposit ratio doesn't tell you how much a marginal dollar of additional deposits would translate into additional dollars of lending.  

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### Answer by username_3 on 2017-01-27. Score: -3

Banks do not make loans using deposits from their customers. So there is never a risk of running out of money to lend. Banks create money when loans are made, and the money is destroyed when the loan principal is repaid.

The only real limit to the amount of loans banks can make is their appetite for the risk that the loan will not be repaid, and mandated [capital requirements](https://en.wikipedia.org/wiki/Capital_requirement). Customer deposits are not involved, and neither is any of the banks own profits.

> **Comments:**
> **username_3**: Please leave a comment if you are downvoting, and explain why.  
> **username_4**: I didn't downvote you, but you were probably downvoted for being wrong. Deposits are a source of funding for bank lending. Any bank's public reporting will discuss them, see this one for example: http://eqbank.investorroom.com/download/EQB+MD%26A+and+FS+-+Q4+2020+vSEDAR.pdf  
> **username_3**: @username_4 That's a common misconception. Have a read of this: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf  
> **username_4**: From page 81 of the [Royal Bank of Canada's 2021 annual report](https://www.rbc.com/investor-relations/_assets-custom/pdf/ar_2021_e.pdf), "... relationship-based deposits, which are the primary source of funding for retail loans and mortgages, were $771 billion or 55% of our total funding..."  

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