Question

Why would banks leave pure arbitrage opportunities on the table? please explain.

Answer 1

Nature of business -

Bank might leave these arbitrage opportunities on the table because of the specialisation banks are imposed on are of deposits, loans, advances , in a nutshell money multiplier opportunities without taking any significant risk. therefore, certain duties are performed by a certain individual who attains specialisation in particular .

what is arbitrage?

Arbitrage is the simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or different forms.

who performs arbitrage ?

arbitrager is someone who engages in arbitrage (who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential) arb, arbitrager.

therefore, these arbitrage activities are looked after by hedge funds, mutual funds, or other specialized opportunities leaving banks aside