Question

How are banks able to attract small savers if small savers can usually receive a higher interest rate from money market mutual funds than from bank savings accounts?

Answer 1

Answer: Federal deposit insurance covers deposit in bank savings while money market mutual fund shares are not covered

Explanation:

There is what is called Federal deposit insurance, it covers deposit in bank savings while money market mutual fund shares are not covered. Money market mutual funds restrict savers savers to writing checks only above a specified amount such as $500, this shows that money market savings aren't as liquid as bank deposits