BBC Learning Zone Clips

CLIP 11880

How do banks work?

How do banks work?
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Key Info
  • How do banks work?
  • Duration: 03:33
  • Robert Peston explains how banks work through the example of his own ‘Pesto Bank’. The explanation is clear, showing how profits are made by borrowing short and lending long. This leads on to a demonstration of the risks involved in a run on the bank. This helps explain how the Credit Crunch bit in 2007 and 2008. This clip from ‘On the Money with Robert Peston’ was first broadcast on BBC Three: bbc.co.uk/programmes/p0073l69 on 29 March 2010. Please note this clip is only available in Flash.
  • Subject:

    Business Studies

       Topic:

    External Factors

  • Keywords: Bank, depositors, deposits, credit, creditors, margin, risk, Credit Crunch, run on the bank, capital, investors, Robert Peston
Ideas for use in class
  • Any personal finance, PHSE, business or economics class, with students aged 14+. With an A level class, students could be asked to work out how much the Pesto Bank could lend, if it was only required to keep 10% of its deposits, ie could lend out the rest. It’s a very good explanation of a difficult topic
Background details
  • Clip language : English
  • Aspect ratio : 16x9

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