how bank loans work, page-2

Hippo

Banks cannot create liabilities by fiat as you suggest.

Banks are just like us. They can’t lend/spend money they don’t have.

When a bank lends $100 it has to borrow an actual $92 and put up $8 of their own money as well and ensure these funds are in their exchange settlement account (with the central bank) to settle the $100 cheque when it is presented! (…I have used the standard capital ratios under the Basel I Capital Accord.) Deposits and capital are actual liabilities. If the cheque a bank issues for a loan amount is presented by another bank and there are no funds in the first bank’s exchange settlement account, aweful things happen. (In my day, the smallest end of day exchange settlement deficit would prompt a phone call from the Governor of the RBA to the CEO of the bank in question!)

Just because a video you watch on youtube has nice graphics, doesn't mean that what it says is true!

I suggest that you read the Basel Accords: http://www.bis.org/publ/bcbsca03.pdf
See Part II: First Pillar – Minimum Capital Requirements

You might read some basic accounting as well.