Final answer:
Banks primarily loan out money that comes from the savings deposits of their customers. They earn income by charging interest on the loans they issue.
Step-by-step explanation:
Money loaned by banks primarily comes from savings deposits. Banks attract depositors by offering interest on their savings and use these deposits to fund loans. Banks make their money through the process of issuing loans and charging interest. Contrary to holding more cash in their vaults, banks aim to lend more to earn more interest. To generate additional income and meet their lending needs, banks may also invest in financial instruments, borrow from larger banks, or from the central government-run bank such as the Federal Reserve in the United States.