For example, when we buy things at a store say Wal-Mart, do they have a bank account themselves at an institution? Where does the money of our debit or cash transactions post to? I know cash gets picked up by an armored truck, but to where? Thanks in advance for assisting my curiosity!
In: Economics
I bank big (really big) business. Yes they have bank accounts just like you do. They just have a bunch that they use for different things. Walmart has a receivables account where they receive credit card transactions and deposit money from the stores. They will have a payables account that they pay vendors and supplies. They will also have a payroll account that they pay their employees from. So yeah big business have bank account with banks.
Now to answer the question you ask in the title of if the post.
The bank lends out money that other business and people deposit. So like you say they keep 10% and lend out 90%. They lend money to business A. Who then in turns pays business B. Business B deposits the money from business B into their bank account. The money keeps moving in this cycle over and over again.
The cycle ends and then begins again when the money makes it down to the employee in the form of payroll who then buys things from Walmart and starts the cycle over agin.
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