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Why Are Banks Able to Pay Such Low Interest Rates

question 78

Essay

Why are banks able to pay such low interest rates on customer deposits?


Definitions:

Certainty Effect

A cognitive bias where people give greater weight to outcomes that are certain, compared to outcomes that are only probable.

Reactance

An inspired response to propositions, individuals, guidelines, or policies that challenge or remove certain freedoms of behavior.

Risk Aversion

In decision making, the greater weight given to possible losses than possible gains.

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, leading to impulsive decisions.

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