Why are banks willing to lend funds to people?

Because interest income is usually the largest component of a bank's income, specifically for a commercial bank. read more

Banks can earn interest income, theoretically, just by taking deposits (at lower interest) and placing the money in other banks or money market instruments (at higher interest), but they can earn higher interest by lending to "people". read more

Let us be clear. "Banks do lend money". The issue is to whom and how much. While they are lending, the level is not up to policy makers' expectations. There is a reason why banks have such large excess reserves and why lending activity is lower than intended. read more