Think of lending as renting capital. Imagine a farmer with expensive equipment that sits idle for most of the year. Instead of letting it rust, he rents it out to another farmer who puts it to good use and pays for the privilege.
That’s what credit markets do. When people or institutions have excess capital—savings they don’t need right now—they don’t just let it sit idle. They “rent” it out through loans or bonds. The borrower uses it to build, expand, or invest, and pays interest—just like rent.
This system keeps money productive rather than stagnant. It connects savers with builders, and both sides benefit. That’s the real engine of economic growth—not just consumption, but smart allocation of resources through credit.
Plus Banks exist to turn small short term money into big long term money.